Bitcoin, Ethereum, other cryptos will never become legal tender in India: Govt official

Bitcoin, Ethereum, and other cryptocurrencies along with non-fungible tokens (NFTs) will never become legal tender in India, Finance Secretary TV Somanathan said on Wednesday. People investing in private crypto must understand that it does not have the authorisation of the government, the official sounded a note of caution.

The digital rupee, which is proposed to be launched by the Reserve Bank of India (RBI), will be a legal tender, he said.

The Finance Secretary’s statement comes a day after Finance Minister Nirmala Sitharaman in the Union Budget 2022 announced income from the transfer of any virtual digital asset will be taxed at the rate of 30 per cent.

The gift of virtual digital assets will also be taxed in the hands of the recipient, FM Sitharaman said.

Loss from the transfer of a virtual digital asset cannot be set off against any other income, the government said in Union Budget 2022.

To capture the transaction details, Tax Deducted at Source (TDS) will be provided on payment made in relation to the transfer of a virtual digital asset at the rate of 1 per cent, according to details in Union Budget 2022.

BITCOIN, ETHEREUM WON’T BE LEGAL TENDER

Bitcoin, Ethereum or NFT will never become legal tender. This means that these won’t be accepted as an official mode of payment in India.

“Crypto assets are assets whose value will be determined between two people. You can buy gold, diamonds, crypto, but that will not have the value authorization by the government,” the Finance Secretary was quoted as saying by ANI.

NO AUTHORISATION OF GOVT

The Finance Secretary has also underlined that those who are investing in private crypto should understand that it does not have the authorisation of the government.

There is no guarantee whether the investment will be successful or not and if one suffers losses, then the government is not responsible for it, the Finance Secretary said.

RBI DIGITAL RUPEE WILL BE LEGAL TENEDER

The digital rupee, which is proposed to be issued by the RBI, will be a legal tender, the government official said.

“Rest all aren’t legal tender, will not, will never become legal tender,” the Finance Secretary said.

“The proposed digital currency of RBI will never default and the money will be of RBI but the nature will be digital,” he said.

TAXATION

Crypto is a speculative transaction and the government has decided to tax it at a 30 per cent rate, the Finance Secretary said.

“No one knows the real value of Ethereum. Their daily rate fluctuates. One who earns income through crypto will now have to pay 30 per cent. This is the new policy of the government,” he said.

SPECULATIVE INCOME

The 30 per cent taxation is not only for crypto but for all speculative income.

“For example, if I take horse racing, that also attracts 30 per cent tax. There is already a 30 per cent tax on any speculative transaction. So we have decided to tax crypto at the same rate,” TV Somanathan said.

UNIFORM RATE

“Currently, we don’t have clarity on cryptocurrency, whether it’s business income, capital gain or speculative income. Some people declare their crypto assets, some don’t. Now the uniform rate will be 30 per cent tax,” the official said.

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