Bitcoin, NFT won't become legal tender but...: Clarification a day after Budget
Finance secretary TV Somanathan on Wednesday said apart from RBI's digital currency, the private digital money will never be considered legal in India. Govt will not be responsible for losses one may suffer in private crypto investment. But trading in crypto (private) is not illegal as it is now under the tax.
Bitcoin, Ethereum or NFT will never become legal tender, finance secretary TV Somanathan said clarifying India's stand on private crypto, RBI digital money and crypto tax, a day after Union Budget 2022. Talking to ANI, the finance secretary said the digital currency will be backed by the Reserve Bank of India which be the only legal digital tender in India. Money will be of the RBI but its nature will be digital, it will be a legal tender, the finance secretary said. Rest (digital money) are all illegal tender and will never become legal tender, the secretary clarified.
“Bitcoin, Ethereum or NFT will never become legal tender. Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorisation by the government,” Somanathan said to ANI.
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“People investing in private crypto should understand that it does not have the authorisation of the government. There is no guarantee whether your investment will be successful or not, one may suffer losses and govt is not responsible for this,” he added.
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Then why bring it under a tax? The secretary said this is not only for crypto; but for all speculative income as the government believes that all income except agriculture is taxable. "Currently, we don't have clarity on cryptocurrency whether it is business income, capital gain or speculative income. Some people declare their crypto assets, some don't. Now the uniform rate will be 30% tax. This is not only for crypto. For example, if I take horse racing, that also attracts 30% tax. There is already a 30% tax on any speculative transaction. So we have decided to tax crypto at the same rate," he said.
On Tuesday, finance minister Nirmala Sitharaman announced 30% tax on profits from digital assets transactions. Explaining, the minister said this is not to be confused with digital currency which will only be issued by the RBI. All except RBI currency are assets, the finance minister clarified.