IndiaTech.org, an industry body of startups that includes crypto exchanges, wants the country’s parliament to provide clear tax laws for cryptocurrencies during its upcoming budget session, according to a letter the group sent to the finance minister.
“It is critical for the Union Budget to clearly lay down taxation clarity around crypto assets by formally naming them in tax laws,” the letter stated. The lobbying group has been taking part in discussions with government officials and the Reserve Bank of India, the country’s central bank, about crypto tax policy.
India’s budget session is expected to start on Jan. 31, and the budget will likely be presented Feb. 1. The session will likely last until the end of April.
As first reported by the Economic Times, the letter was sent on the day CoinDesk released an in-depth report about how India’s crypto exchanges were recently “inspected” by tax agencies, which recovered more than Rs 84 crore ($11 million) during the “inspections.” Binance-owned WazirX, which was one the exchanges that were inspected, blamed a lack of regulatory clarity for the inspections. It’s that lack of clarity that IndiaTech.org wants to address.
“We have just submitted the letter yesterday and the intent is for the government to take the recommendations into consideration in the upcoming budget,” said IndiaTech President and CEO Rameesh Kailasam.
The group said that “there may not be the need for a bill around cryptocurrency if existing provisions are appropriately amended/notified accommodating crypto assets and regulated starting with the upcoming union budget.”
India’s draft cryptocurrency bill is still in the works and probably won’t become law until after the budget session ends, CoinDesk has reported.
The group’s recommendations include granting cryptocurrencies recognition as a digital asset, enabling provisions in the direct tax laws. Th group also said that an indirect tax (GST, or the goods and services tax) should be levied only on an exchange’s trading fee, not on a transaction’s value.
The letter also said that the country should register Indian-founded cryptocurrency exchanges, giving them the status of “authorized dealers,” and asked the government to set up a system of checks and balances, including allowing only Indian founders to operate such businesses (minimum ownership of 26% by Indian founders/entities in crypto exchanges).
“We have suggested a practical way forward, which is doable,” Kailasam said. “Our white paper released earlier was also in the same direction to address concerns and move towards a practical regulatory process.”
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