New Delhi: The central government has clarified its position regarding private cryptocurrencies operating in India. The government has bluntly said that Bitcoin, Ethereum or NFT will not get legal recognition. Finance Secretary TV Somanathan gave this information in a press conference held on Wednesday. With this, the government has also made it clear that the public will invest in bitcoin or any private cryptocurrency and if there is a loss in it, then the government will not be responsible for it.
Speaking to news agency NNI, the Finance Secretary said, “Cryptocurrencies like bitcoin or ethereum will never become legal tender, only digital rupee issued by Reserve Bank of India (RBI) will be legal tender.”
He said, “Digital Rupee will be backed by RBI which will never default. The money will be of RBI but the nature will be digital. The Digital Rupee issued by RBI will be legal tender. We deal with non-digital assets like digital assets like we buy ice cream or other things using our wallet or pay through UPI platform.”
read also
“Everything else is not legal tender, will not be, will never become legal tender. Bitcoin, Ethereum, or any picture of an actor becoming an NFT will never become legal tender.”
Somanathan said that crypto assets are assets whose value is determined between two people, you can buy gold, diamond and crypto assets, but that value will not be authorized by the government.
He added, “People investing in private crypto should understand that it does not have government authorization. There is no guarantee that your investment will be successful or not, someone may lose money and the government is not responsible for it. The Finance Secretary clarified that things which are not legal does not mean that they are illegal.
Somanathan said, “I am not saying that bitcoin or ethereum is illegal, but it is not legal either. But I can say that if there is regulation for cryptocurrencies then it will not be legal tender.”
Somanathan said that the regulation may demand KYC, vendor’s license, but will be decided by the government later in consultation with the stakeholders. “We will also see what is happening in other countries,” he said. Elaborating on the Digital Rupee, Somanathan said that, “Digital Rupee will not be like Bitcoin and Ethereum.”
Somanathan further added, “Through Digital Rupee, you do your transactions like you are currently doing through your digital wallets like Paytm, UPI. Digital Rupee is a legal tender and is equivalent to cash payment.”
The Finance Secretary also clarified about the 30 per cent tax rate on digital asset transfers. He said that any income other than agriculture is taxable as per the policy of the government. “We currently do not have clarity on cryptocurrencies, whether it is business income, capital gains or it is a speculative income. Some people declare their crypto assets, some don’t. Now from April 1, 2022, a uniform rate of 30 per month will attract 100% tax on transfer of digital assets.
He further added, “It is not just for crypto, it is for all speculative income. For example, if I take up horse racing, that too is taxed at 30 percent. There is already a 30 per cent tax on any speculative transaction. That’s why we have decided to tax crypto at the same rate. Crypto is a speculative transaction, so we are doing it at 30 per cent.”
He said, “No one knows the real value of Ethereum. Their rate fluctuates daily. Anyone earning income through crypto will now have to pay 30 percent. This is the new policy of the government.