Government to Rethink Crypto Policy
The government of India has been very hostile to digital assets, imposing strict tax policies and other regulatory barriers. What has been going on in terms of their global adoption may just change this.
Ajay Seth, India’s economic affairs secretary also said not long ago that digital assets “don’t believe in borders.” As such, India seems quite cognizant that the world is moving toward crypto-and maybe does not want to be left out.
The government recently imposed a new tax of up to 70% on undisclosed crypto gains, signaling a firmer grip on the sector. However, experts say growing adoption across other countries, including the United States, could force India to reconsider its regulatory approach.
India’s Harsh Crypto Taxes and CBDC Push
Currently, India taxes a flat 30% of capital gains from digital currency trades, regardless of how long one has held them. In addition, there is a 1% TDS on every trade. As legal experts note, regulations such as this one have the effect of discouraging innovation and driving crypto activity underground in the country.
Supreme Court of India Advocate Amit Kumar Gupta described such taxes as “draconian.” Quite clearly, he said, the government regarded “cryptocurrencies as a tool for committing pernicious illegal activities rather than any financial innovation”.
While instituting all major restrictions on crypto, the government is simultaneously promoting its CBDC. The ex-governor of RBI, Shaktikanta Das, has termed the CBDCs “the future of currency.” Just reinforces the focus of the government upon a state-controlled digital financial system.
A Possible Change in India’s Crypto Policy
India’s resistance to no central entity-led cryptocurrencies may not be very long. Major world economies, including the U.S. and the European Union, are working toward building a regulatory framework that recognizes crypto as a part of the financial system, which may automatically push India to adapt.
The RBI has already begun expanding its cross-border payment platform-big-value transfer system-which could very well include CBDCs for international settlement. This indicates the gradual move toward digital currencies, though in a controlled way.
If global crypto adoption continues apace, it may well be that India changes its mind to stay competitive in the digital economy. The whole preference of the country goes toward centralized solutions, and this may be adjusted with regulations.
