The government is ready with its consultation paper on cryptocurrencies, economic affairs secretary Ajay Seth said on Monday.
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He said there are two aspects. "One, our consultation paper is fairly ready and we went into a deep dive and have consulted not just the domestic institutional stakeholders but also the World Bank, and the International Monetary Fund. So we hope that we will soon be in a position to finalise our consultation paper," Seth said.
"The other is digital assets. Whatever way we want to deal with those assets, there has to be a broad framework on which all economies have to be together. This point has been made time and again. Even other countries are talking about the same thing. The IMF is also talking about the same thing, as is the US treasury. We are looking at a 'global paradigm' on digital assets," he said.
"Whatever it takes, it’s a dynamic situation. We are not looking at a static situation and then giving a peace meal solution. As the situation evolves, it’s continuously evaluated. Whatever it takes, is done subject to overall constrains," he said.
Seth said there needed to be a global consensus on cryptocurrencies. "For any country, if there’s global consensus around the regulations, then again there has to be a broad framework of participation of countries," he said, adding India would look at regulations enforced in other countries before deciding how it would regulate.
Ajay Seth also said the government expects inflation to come down in the coming months.
"If you look at the prices of commodities, from May they have moderated from their peaks. There is a lag effect and if that happens to be an imported commodity there’s always supply-chain lag that happens. We do expect in the coming months the inflation should be moderating. And for that whatever steps that were needed from the fiscal side have been taken, and monetary authorities, Reserve Bank of India
The economic affairs secretary said in a dynamic situation the government can’t be talking about what challenges will come for the global economy. "Please understand we are fairly integrated with the global economy," he said.
When asked say what future steps are likely, Ajay Seth said it is not possible for him to say anything in this regard. He said, "Whatever the current challenges are, they are being responded to in a timely manner." He also said that a global response is needed to deal with the challenges posed by crypto.
"Regular monitoring happens on a continuous basis....It’s not a one off exercise. In fact, we mull over it on a daily basis and take a structured review as well. It’s a continuous process," Ajay Seth said.
"Obviously, things slowdown when headwinds are there. At the time of budget, one estimate was that Indian economy will grow at 8-8.5 percent. The budget assumed 7.5 percent . At that point in time....I have not seen any rating agency talking about a number lower than this," Ajay Seth said.
Cryptocurrencies in India
In the annual budget this year, the government said it would tax gains made through cryptocurrency investments at 30 percent but the country has still not given the measure legal status.
Union Finance Minister Nirmala Sitharaman proposal of levying a 30 percent tax on crypto earnings came into effect on 1 April.
The Budget 2022-23 had also proposed a 1 percent Tax Deducted at Source (TDS) on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act. These provisions related to 1 percent TDS will come into effect from July 1, 2022.
While the government has been working on the classification of cryptocurrency as goods or services under the GST law, it has also been mulling bringing legislation to regulate cryptocurrencies, but no draft has yet been released publicly.