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Reason for High Tax on Crypto; Nilekani on Anonymity of CBDC

Crypto tax is similar to that on lottery, betting, and gambling by legislators; CBDC has to be anonymous.

Crypto Tax High to Dissuade People

Senior parliamentarian Sushil Kumar Modi, on Tuesday in Rajya Sabha said that crypto has been taxed at the “highest slab of tax” at 30 per cent “and that is without any exemption”.

It has been done “to dissuade people from investing in crypto because it is highly speculative and volatile. The tax treatment is similar to betting but there is no clarity regarding levying of GST.”

He opined that the government levies 18 per cent GST “only on service provided by the crypto exchange and is treating it as financial services but cryptos are similar to Lottery, Casinos, Betting, Gambling, Horse Racing, which have 28 per cent of GST and that is also on the entire value, on the entire transaction.”

On Gold, he said that GST is levied on the entire value of the transaction so is the case with shares.

That’s why he recommended the Government “to take initiative in the GST Council to levy a 28 per cent GST on entire value like lottery, betting, gambling or casinos.”

He called crypto a speculative asset which is “not an instrument of skill. It is an instrument of chance. Nobody knows who the owner of crypto is. There is no intrinsic value, no underlying value. It is neither security nor commodity; so, it is not an asset and even if it is an asset, it should be treated like gold.”

As of now there is no announcement from the Government to clear the ambiguity surrounding GST on crypto.

Anonymity of CBDC

Nandan Nilekani, the co-founder of Infosys and the visionary behind Aadhaar, told Economic Times that the digital rupee CBDC should not be used for state surveillance. It needs to have anonymity to prevent misuse.

“I think the digital rupee should be anonymous because one of the concerns obviously is that if all payment transactions are recorded and visible, it has other issues [such as] surveillance,” Nilekani said.

He believes that India is on the right path and “doing the right thing” by recognizing Digital Assets.

It could kickstart another wave of fintech revolution that India is currently witnessing.

“It will be very easy to take the digital rupee to consumers who have a UPI application since it will facilitate easy transactions in digital rupees or help convert digital rupees to regular rupees,” he added.

He also advocated for open technology networks that startups and technology firms leverage for innovation. The digital rupee will result in similar innovation at the front, according to him.

Crypto regulation is an evolving process. Earlier, the Government proposed a blanket ban on crypto. Today it has recognised crypto industry through taxation. Even the proposed tax regime has not been finalized.

News recommendation: Indian Crypto Exchanges Update

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