Greetings friends!
The Government of India has been against cryptocurrencies for many years. In 2018, the Central Bank of India, i.e., the Reserve Bank of India, ordered commercial and merchant banks operating in India to disallow companies and entities involved in the business of cryptocurrency from transacting through the banking system. This hampered the growth of cryptocurrencies in India. I remember that in April 2018, in a single day, the price of Bitcoin in INR became half of the price overnight on crypto exchanges operating in India. It crippled cryptocurrencies in India.
Later, the Internet & Mobile Association of India (IAMA) filed a case in the Apex Court of India. The IAMA appealed in court that dealing and trading in cryptocurrency was a legitimate business activity. It also stated that the RBI did not have jurisdiction over it, as these assets could be classified as commodities rather than currency. In 2020, the Supreme Court lifted the ban. Later, the Government of India imposed heavy taxes on crypto transactions.
In India, no matter how much one has sustained loss in crypto trading, if one has profit in one trade, one is liable to pay a 30% tax on it. Even if you swap one crypto for another crypto, you’ll have to pay the tax at the rate of 30% on it. This is very heavy taxation. That’s why people are taking the peer-to-peer route for crypto trading. People who are found to have done this face the freezing of their bank accounts by the authorities as well.
In January this year, the government also banned crypto giant exchanges like Binance for non-compliance to its rules. Before the ban, Binance was responsible nearly 90% of the estimated $4 billion in crypto holdings of Indian nationals. The platform’s remarkable market dominance was also attributed to its non-compliance with tax laws, which allowed investors to trade without paying the 1% tax deducted at source that is applicable on registered exchanges. After negotiating and paying a penalty of about $2 million in May this year, the world's largest crypto exchange resumed its operations in India. Now it is an entity registered with the Financial Intelligence Unit (FIU) of the finance ministry of the Government of India.
This is a great development. This is a good news for crypto enthusiast in India. It seems that though the government has still not recognized cryptocurrencies as legal assets, it has somehow allowed them to operate, and as the government is getting tax from it, legal status may be deemed to be provided. I think it will be a great help for crypto businesses in India and cryptocurrencies will flourish in India from this development.
Source: Internet
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