The head of the Central Board of Direct Taxes (CBDT) in India said the recent announcement of a 30% tax on crypto holdings doesn’t necessarily make the crypto trade legal in India.
The finance minister of India announced a 30% tax on crypto holdings during the budget session on Tuesday, triggering several headlines on the lines of “India legalizes crypto.” However, CBDT chief J.B. Mohapatra aimed to debunk these misconceptions.
Mohaptra in a post-budget presser said that the new crypto tax would help the income tax department measure the depth of the digital currency market in the country. He also stressed that imposing a tax on the nascent crypto market doesn’t necessarily legalize its trade in the country. He explained:
“The crypto trade or the digital assets transactions do not ipso facto become legal or regular just because you have paid taxes on that.”
LIVE | Digital assets to be taxed at 30%. But what are digital assets? #Cryptos & #NFTs? Why no #tax relief for the middle class? Watch JB Mohapatra, Chairman, CBDT and Vivek Johri, Chairman, @cbic_india@NayantaraRai #BudgetWithETNOW #Budget2022 https://t.co/ZToktkeag7— ET NOW (@ETNOWlive) February 1, 2022
The tax department chief added that the legality of the crypto trade could be determined only after a clear national framework is introduced in the parliament. However, he justified the tax imposition claiming it would help the department to track illicit activities associated with digital assets. He also advocated for regulating the crypto market to track the flow of money going in and out of the digital asset ecosystem.
The Indian government has been working on crypto regulatory frameworks since 2019 but has been only recently introduced a crypto bill. Some crypto exchange operators called the 30% tax progress, stating that the government has come a long way from its early days when it was looking to impose a blanket ban and jail terms for crypto-related violations.
Thailand recently quashed its 15% tax proposal on crypto transactions after facing backlash from retail market operators. South Korea also delayed its 20% tax proposal due to a lack of clarity on crypto regulations.