Amid the growing popularity of cryptocurrencies in India and worldwide, former Bihar deputy CM and finance minister and now Rajya Sabha MP Sushil Kumar Modi batted for a 50 percent tax on gains made from cryptos and digital assets -- up from 30 percent. He also said the fate of cryptocurrencies will be decided by the Union government in the days to come.
In an interview given to Forkast, the incumbent MP said, “Nobody knows what is this crypto. They (the Indian government) are in the process of bringing a law and in the coming days, they will decide about the fate of this crypto -- how to treat this crypto -- is it an asset? Is it a commodity? Is it a stock? Is it goods or services?” All these things have to be decided in the near future.”
‘Only countries with unstable finances legalise cryptos’
Modi further said that only countries with unstable finances are legalising cryptos to increase their revenues. According to him, India is in a good financial position and hence does not need to regularise cryptos. “We feel these cryptos are not good for the financial stability of any country,” Modi said. He made it clear that the Union government would never legalise cryptos as legal tender or fiat currency like Ukraine or El Salvador.
Wondering why the young generation wants to invest in cryptos, Modi batted for investing in mutual funds and stock markets, which are much safer. “We have given time to younger people who want to exit (cryptos). Those who want to remain will have to contend with higher taxes because it is like gambling,” he added.
Stating that anyone who wishes to trade freely in cryptos can leave the country, he said, “Anybody can go outside India, you can’t stop people from going to Dubai or other places. Casinos are in South East Asian countries and people may be going there.”
The government’s hostility towards cryptocurrencies dates back to 2018, when RBI had imposed a ban on all cryptocurrencies, which was later turned down in 2020 by the Supreme Court. The Economic Times had then reported that more than 50 Indian crypto and blockchain entrepreneurs had moved their business out of India, including Zebpay, one of India’s largest exchanges at that time. However, it resumed its services in India after the ban was lifted.
Cryptos are like gambling
Comparing crypto trade to gambling, Modi called for 28 percent taxation on the entire crypto transaction. He said: “The government has not said in so many words -- that crypto is like gambling, it is like lottery, it is like a casino, it is like horse-racing -- and in all these things the tax rates are very highly.”
The Union government is yet to make up its mind on whether to treat cryptos as a commodity or asset. Currently, 18 percent GST or factory gate taxes are levied on services provided by crypto exchanges, categorising them as financial services.
Stating that before it was mainstreamed, cryptos were being used by smugglers and drug pedlars for easy and smooth transactions, Modi further pitched the Union government to work with the IMF and World Bank to discuss regulation and exchange of information on cryptos.
“Also, it is said that when it (crypto) started, it was mainly on the darknet that people dealing with drugs, or operating in smuggling were doing their business in cryptos. So, they may not get caught by the RBI, or the bank officials in other countries also.”
