India Justifies Taxes on Cryptocurrency Holders

India’s Finance and Corporate Affairs Minister Anurag Singh Thakur said there is a need to levy income tax on cryptocurrency holders. Local media report.

The official cited the 1961 income tax legislation, under which citizens are required to pay income tax on income from any source.

“Regardless of the nature of the business, all income from any source is subject to taxation. Profit derived from the transfer or provision of cryptocurrency exchange services is taxable,” Thakur said.

The minister also added that citizens must declare cryptocurrency and calculate their taxes themselves.

However, as digital assets do not yet have a special classification, they do not fall under the Goods and Services Tax. The government does not have access to data on cryptocurrency holders’ incomes.

Thakur did not rule out the possibility that authorities will study the feasibility of a bill on cryptocurrency taxation. The initiative, he said, is aimed at curbing illicit payments and money laundering.

Earlier the Central Bureau of Economic Intelligence of India had proposed taxing cryptocurrency trading under the Goods and Services Tax at a rate of 18%.

Back in 2019, a government-commissioned working group concluded that cryptocurrencies have no intrinsic value. Authorities were advised to ban all digital assets except central bank-issued tokens.

In February 2021, Bloomberg, citing a source in the Ministry of Finance, reported that if a ban were introduced holders would have three to six months to close out their positions.

In March, according to one of the senior officials, India would consider a bill introducing criminal and administrative liability for miners and traders.

In the same month the Ministry of Corporate Affairs ordered companies to report on transactions involving digital assets, as well as advances or deposits “from any person.”

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