On 1st Feb 2022, the Finance Minister of India declared the budget, in which, crypto transactions are taxed at 30%. However, soon after the budget was released, the Indian Tax Department chief stated that the tax applied on crypto doesn’t make it legal. It’s intended to help the department determine the actual depth of the digital currency market.
The Tax Doesn’t Imply Crypto Is Legal: CBDT
India’s Central Board of Direct Taxes has announced that the latest announcements made regarding 30% tax implementation on crypto holdings should not be necessarily interpreted as the legalization of crypto.
The budget announced by the Finance Minister of India spiked several rumours and anticipations among crypto investors, especially regarding the legalization of crypto. So, in order to curb the excitement, JB Mohapatra, the chief of CBDT planned to clarify all the misconceptions.
Mohapatra addressed the press at a post-budget presser and said that a novel tax on crypto is intended to help the income tax department. With this tax, the department will be able to evaluate the depth of the digital assets market within the country. The chief also emphasized that a developing crypto market will not get legalized for trade by a mere imposition of tax.
He further explained that paying taxes on digital assets or crypto trade would not ipso facto transform it into a legal entity.
Chances of Crypto Becoming Legal in India
In addition to his statement, the chief of CBDT added that the crypto trade’s legality will be determined only once an explicit national framework will be brought into the parliament. Although, he further justified the tax by professing that tax will help the department to monitor illegal activities related to digital assets. He further supported the motion of regulating the crypto market to supervise the money flow within and outside of the digital asset ecosystem.
Crypto Regulatory Framework in India
The government of India has been planning to create a crypto regulatory framework since 2019, although, it has just recently introduced a crypto bill. Some crypto exchange operators state that 30% tax is progress as compared to the complete ban on crypto and serious offence trials on violation of the crypto stake.
