A Pre-budget expectation survey by Grant Thornton showed a growing demand for increasing regulatory focus on the cryptocurrency sector by the Indian government. Approximately 79 percent of respondents believe that the focus of Budget FY23 should be on regulating cryptocurrencies and NFTs.
Vivek Iyer, a financial services partner at Grant Thornton Bharat stated:
“The market survey clearly demonstrates the expectation for the government to be forward-looking by focusing on initiatives around evolving risks, that help strengthen stability and growth of the financial services ecosystem”
Why are pre-budget expectation surveys necessary?
During the budget session, policies, incentives, and taxation are introduced that are critical to the upliftment of sectors and their growth. As the Indian economy grapples with the effects of the pandemic as well as other external issues, appropriate government actions might bring much-needed reassurance.
Another budget expectation is the much-needed clarity for taxation around crypto. The present regulations under Indian tax laws do not apparently mention crypto as a source of revenue. Tax experts only draw comparisons in connection to taxability based on broad learning of the nature of transactions and understanding of provisions under the tax laws and numerous court precedents.
In the lack of formal regulations governing cryptocurrency taxes, the taxation of cryptocurrencies may have to be decided based on the intent of the person engaging in bitcoin transactions. Gains from crypto transfers are either categorised as “business income” or “capital gains,” with residual revenue from other sources.
What lies in store for the future of crypto in India?
Ever since crypto became the talk of the town in India, the country has always been dubious about speaking about crypto and its regulation. Legalities around crypto have always seen a red flag where the country is in a puzzle as to whether ban or regulate it.
According to news sources, the government intends to regulate cryptocurrency transactions through the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.’ While regulating cryptocurrencies will give a legal framework, the forthcoming budget is likely to clarify their taxability and provide assurance and direction to crypto investors before they invest.
While the government works on it, we can hope for the best, stay educated, and stay away from scams.