The cryptocurrency space in India has long been developed in a grey area, without relevant legislation and regulations. These are now changing though.
Last Monday, an official of the Ministry of Finance of India stated that all profits from the purchase and sale of cryptocurrencies are subject to tax.
The cryptocurrency market in India is in a “legal vacuum”, with all kinds of investors finding it difficult to determine their taxable profits, but tax evasion now seems impossible.
Finance Minister Anurag Singh Thakur, referring to the country’s tax law since 1961, said it refers to “income from any source”, including profits from buying and selling cryptocurrencies, even if they are not explicitly mentioned.
As he characteristically said: “No service offer is typically excluded, so cryptocurrency related services are not excluded either“.
He added, however, that the government has no data on these transactions, as so far, no mechanism had been set up to collect the relevant data.
The Indian Central Council of Indirect Taxes and Customs issues unique activity codes (KAD) to clarify each service that is subject to taxation. Cryptocurrencies, which are not recognised in any way in India, do not have a relevant KAD. This situation, of course, creates difficulties for both the government and the taxpayers.
As reported, a major debate on the future of cryptocurrencies and the forthcoming legislation on related issues has been under way in India since February. Much has been said and written, and sometimes are conflicting. From the complete ban on the possession, marketing and provision of related services, to the government-controlled experimental use of some related technologies.
However, the landscape now seems to be clearing up among the Indian leaders, who had created a very vague picture of what was going to happen. Now the messages coming from the government side are that those in charge are finding a common voyage, which they will present, as it seems, soon.