As India seeks firm footing on cryptocurrency, investors await clarity

moneycontrol.com:

Almost two months after the government proposed a taxation policy for income from trading in virtual digital assets (VDAs), there is still a lack of clarity on various aspects, experts said.

According to Pratik Gauri, founder of 5ireChain, a blockchain ecosystem, the wavering clarifications and piecemeal developments indicate that the government is feeling its way through the subject of crypto regulation, and with little or no precedent to go by, it is trying to find a foothold in understanding the various challenges it will face in implementation once regulations are in place.

“One thing that I’ve repeated in the past and would like to re-emphasise is that the Reserve Bank of India (RBI) and the government are grappling with the reality that cryptocurrencies are not a fad and are here to stay,” said Gauri.

The government proposed in the Budget 2022 on February 1 that income from the transfer of any virtual digital asset be taxed at 30 percent. It said no deduction of any expenditure or allowance will be allowed while computing such income, except the cost of acquisition. It also proposed that a loss from the transfer of VDAs cannot be set off against any other income.

This week on March 21, the government clarified that losses from the transfer of virtual digital assets cannot be set off against gains from another. Neither can mining costs be treated as acquisition cost for tax deduction.

Also Read | FinMin may move amendments to Fin Bill today; seeks to tighten crypto tax rules

With no headway being made on a bill to regulate cryptocurrencies, it’s still not clear whether digital currencies are legal. Although investors say the tax provisions have effectively legalised crypto trading, Finance Minister Nirmala Sitharaman has