Former RBI deputy governor explains rationale for taxing cryptocurrency transactions

Cryptocurrencies in India should be taxed according to how they are acquired. This was stated by former Reserve Bank of India deputy governor Rama Subramaniam Gandhi, CoinDesk reports.

At the Crypto Asset Conference HODL 2021, the former official acknowledged the independent nature of cryptocurrencies and said regulators should not stifle developing technologies.

In turn, the industry must comply with the country’s laws, Gandhi noted. He urged tracking transactions with digital assets through "a central repository".

“Cryptocurrencies should be paid for through ordinary payment channels. If not, they are deemed mined and fall under capital gains tax,” emphasised the former RBI official.

According to him, without a proper regulatory framework, digital assets could be used in illicit activities.

According to Chainalysis as of 2020 they estimated the number of crypto investors in India at 15 million, and the value of the assets owned by them at $38.8 billion.

In May ForkLog reported that RBI asked banks to sever ties with bitcoin exchanges. After that the regulator urged supervised institutions not to refer to the revoked directive prohibiting cryptocurrency operations.

In June the media learned of India’s plans to introduce a 2% tax on digital assets acquired on foreign exchanges.

Earlier in Parliament introduced a bill that would ban cryptocurrencies, but it was never tabled.

Later, Bloomberg reported that the government planned to consider the regulation of the digital assets class.

In July, sources at The Economic Times said authorities were studying the possibility of introducing an additional 18% tax on foreign cryptocurrency exchanges.

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