Various cryptocurrencies are currently in a gray area. Buying and selling crypto currency is not illegal. We have now designed the taxation framework to treat crypto assets for taxation like earnings from horse racing, gambling and other speculative transactions. According to Finance Secretary TV Somanathan, “The government is working towards enacting a law to regulate cryptocurrencies. The proposed legislation will require the approval of the Union Cabinet headed by the Prime Minister before it is introduced in the Parliament. Somanathan said, there is a debate going on in the country on how to regulate crypto. The government’s thinking is that there should be a comprehensive consultation on this issue in the country and it is also to see what is happening at the international level. At present, the government will not rush the regulation and will levy tax on the earnings from such transactions. Private cryptocurrencies will not be legal tender. The Reserve Bank plans to launch its own digital currency in the new financial year starting April 1, 2022.
In fact, after a long deliberation, the government made it clear in this budget that it would tax the income from the transfer of virtual assets, including crypto, at the rate of 30%. It will come into effect from 1st April 2022.