India’s Finance Minister Nirmala Sitharaman, in her statement in the Rajya Sabha, said that the Government would decide on banning or not banning the cryptocurrencies based on inputs from consultations. Nevertheless, it is a sovereign right to tax the profits from trading cryptocurrencies.
The Government will treat Cryptocurrencies as Virtual Digital Assets (VDA). Therefore, a tax of 30% will be levied on them, apart from the TDS deduction at the source. Further, those receiving such assets as gifts will also be taxed.
Earlier in the Union budget, the Finance minister had announced that the Reserve Bank of India would introduce its digital currency based on the blockchain technology. The step might revolutionize digital transactions, as nearly two crore people in India have already invested in cryptocurrencies. However, RBI has also warned that the crypto trade by private institutions can cause instability in cash flow. That is why a decision on legalizing cryptocurrencies is still under contemplation.