- A crypto regulation bill is in the offing since February 2021
- Industry has been lobbying to reduce 1% transaction tax
The Indian government has sent the list of tentative bills that it plans to introduce in the upcoming Winter Session (December 7-29) to the Parliament Secretariat, media reports said. And, the list doesn’t include a crypto bill that is in the offing for over two years now. During the Winter Session of Parliament last year, a crypto regulation bill was mentioned among the list of bills likely to be taken up. But the government did not introduce it.
Crypto Regulation Bill in Limbo Since Feb 21
In February 2021, Indian Finance Minister Nirmala Sitharaman said in Parliament that the government will bring The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the ongoing Budget Session.
She also revealed that an inter-ministerial committee had recommended banning cryptocurrencies including bitcoin. The other objective of the proposed “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” was to provide the legal framework for the launch of an official digital coin — digital rupee of Indian CBDC.
But the government did not introduce the bill in Parliament, promising to bring a modified bill in the Winter session.
Crypto Taxes and CBDC Launch Plans
The year 2021 witnessed an unprecedented rise in the popularity of cryptocurrencies and the crypto industry saw one of the strongest bull runs. It made it difficult for the government during the Winter Session in December 2021 to take any decision to ban cryptocurrencies without risking being unpopular. The government once again decided against introducing the bill.
In February 2022, the government bifurcated the agenda of the bill and separated the CBDC plan, and facilitated its release by amending the law that regulates the central bank, the RBI Act.
The government did not make any decision about the regulation of cryptocurrencies but imposed a 30% capital gains tax and 1% transaction tax on trades above Rs10,000 ($250). One percent transaction tax in intraday trade where a trader might do 50 transactions can amount to money, making crypto trades not only unprofitable but a tax nightmare.
Demand to Reduce 1% Transaction Tax
Indian crypto industry has been lobbying hard with the government to reduce the transaction tax to 0.1% but the government has not obliged the crypto industry as yet. Nevertheless, the government is under pressure to make the regulatory environment clear and provide relief from an unfriendly heavy tax environment.
In this context, the crypto industry was expecting the Indian government to bring a crypto regulation bill in the upcoming Winter Session but the legislative agenda that it has sent to the Parliament secretariat does not include any such bill.