Decision On Banning Or Not Banning Of Cryptocurrency Will Come After Consultations: FM

The finance minister said that the government has sovereign right to tax cryptocurrency

Finance Minister Nirmala Sitharaman during the ongoing Budget session in the Rajya Sabha on Friday. Photo: PTI

New Delhi: Finance Minister Nirmala Sitharaman during the Union Budget discussion in the Rajya Sabha on Friday said that banning or not banning cryptocurrencies will come subsequently after consultations.

The minister said, “I am not going to legalise it or ban it at this stage. Banning or not banning will come subsequently, when consultations give me input.”

About the profit emanating from transactions in cryptocurrencies, she stated that “(Whether it is) legitimate or illegitimate, it is a different question, but I will tax because it is a sovereign right to tax”.

The finance minister was replying to a question on imposing tax of 30 per cent on all proceeds of the digital currencies. She said that taxing income does not mean the government is legalizing cryptos. Sitharaman said that taxing is a sovereign right of the government.

The Budget has proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.

Also, no deduction in respect of any expenditure or allowance shall be allowed while computing income from transactions in such assets. It has also specified that losses from the transfer of virtual digital assets will not be allowed to be set off against any other income.

The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.

During the discussion, Sitharaman also said the Indian economy suffered the biggest contraction because of the Covid-19 pandemic, but the government has been able to contain retail inflation at 6.2 per cent, as she mentioned that the Budget for FY22-23 stands for continuity, brings stability to the economy along with predictability of taxation.

The finance minister explained that the economy suffered Rs 9.57 lakh crore loss due to the pandemic, compared to a loss of Rs 2.12 lakh crore during the global meltdown in 2008-09.

She also told the House that the government is also encouraging start-ups which resulted in creation of many unicorns during the pandemic.

The FM said capital spending gives much more multiplier than revenue route; choose public capital spending to boost economy.