Cryptocurrencies could be defined as commodities or assets in the proposed draft bill, reported The Economic Times. As per the report, the bill will also compartmentalize cryptocurrencies based on the use cases. The government is also considering the tech used to categorise cryptocurrencies. Earlier in May, we reported on the government modifying its hardline stance to consider regulation than an outright ban.
The Finance Ministry a few days earlier said that the bill is awaiting Cabinet approval and tabling in Parliament. The government had not provided much information on the contents of the current bill, apart from occasional leaks in the media. The treatment of cryptocurrencies in the bill would decide the future of the sector in the country including economic activity and innovation.
A person quoted in the ET report said the government’s draft crypto bill aims to define cryptocurrency and its treatment in various use cases. The bill will primarily offer clarity on accounting and taxation aspects of holding cryptocurrencies which so far remains a legal grey area.
Given the reservations of RBI and central banks elsewhere, the bill may not permit payments and settlements through cryptocurrencies. The government had earlier said it would not go for an outright ban on cryptocurrencies but has not yet provided any clarity on how it plans to regulate the industry.
The sources quoted in the ET report informed that the government could bring in something similar to security transaction tax (STT) on cryptocurrency trade. The direct tax and indirect tax departments are currently examining the taxation of cryptocurrencies. The cryptocurrency transactions under the present law could attract equalisation levy and GST at 18%. Earlier this week, reports emerged that the industry representatives have represented for IFSCA to be designated as a regulatory body.