What can be termed as positive news for cryptocurrencies, the Indian government plans to define cryptocurrencies in a new draft bill based on their use cases. Further, for taxation and other purposes, the bill will treat cryptocurrencies as an asset/ commodity. Additionally, the bill also compartmentalizes such currencies based on use case: payments, investment, or utility, ET reported.
This will be the first time that India classifies cryptocurrencies based on the technology they employ. Further, sources say for regulatory considerations, the government’s focus will be on the asset’s end-use. The measure is also anticipated to spell out the tax treatment for such assets, ensuring proper books-keeping. A source disclosed:
“The government in its draft bill is working towards defining cryptocurrency and its treatment in various use cases, so that it can be treated correctly in the books of accounts plus it should be taxed in the right manner. It is not looking to allow payments and settlements through virtual currencies.”
Changing approach towards positive regulation
Earlier, Indian banks eased restrictions on the purchase of Bitcoin and other cryptocurrencies through their channels after RBI asked them not to stop customers & exchanges from dealing in crypto.
The government’s move to categorize cryptocurrencies according to their use cases will assist to accelerate the adoption of digital coins in the country, which is already gaining traction. Finance Minister Nirmala Sitharaman has announced that a law on cryptocurrency is awaiting Cabinet clearance. The move should gain a positive response from industry players as they earlier proposed regulating cryptocurrency.
The news would also make global exchanges happy, as they plan to enter India.