With India's Income Tax Department reportedly considering taxing cryptocurrency traders and crypto exchanges soon, experts believe that investors should rest assured.
According to a report by ET Now, the tax department, which operates under India's Ministry of Finance, has signaled an interest in taxing cryptocurrency income through trading and exchanges. However, sources say the move does not entitle cryptocurrencies to a major position in the asset class.
Indian entrepreneur Nischal Shetty, CEO of crypto exchange WazirX, said that getting clarity on the cryptocurrency goods and services tax (GST) will help identify the asset class of cryptocurrencies:
"It is clear that your earnings from cryptocurrencies are taxable like other income and should be declared in your tax return. For now, it is not clear whether GST tax will be applied on the amount of cryptocurrency purchased or on the transaction fees paid by the user."
As such, the preliminary report suggests that the Indian government believes that any activity that generates income in cryptocurrencies must be taxed. However, a legislative proposal to be published by the government soon will provide further clarity on this decision.
On September 9, Reserve Bank of India Governor Shaktikanta Das reiterated concerns about cryptocurrencies such as Bitcoin ( BTC ): "We have conveyed to the government our serious and grave concerns about cryptocurrencies from a financial stability perspective."