update 14 September 2021

Recent Report Reveals India Ministry of Finance’s Plan to Impose Taxes on Crypto

In a recent report, the Indian government is slowly changing its stance on the cryptocurrency space. According to the report, Indian lawmakers are thinking of imposing taxes on all cryptocurrency-related activities. Consequently, the taxation is going to affect all crypto exchanges and trades in the country. 

Moreover, the report shows how the decision focuses on the idea that crypto-based ventures are profitable. Thus, in line with this statement, the government of India intends to impose taxes on crypto-related activities. And only because they are profitable. 

What the Indian Government Faces ahead of Regulating Crypto

The alleged move by the Indian government has resulted in mixed reactions by stakeholders in the cryptocurrency ecosystem. Some parties find the government directive intrusive and unnecessary. On the other hand, others welcome the move as it may promote positive crypto-ecosystem outcomes. 

By adjusting the tax status, lawmakers in India will require specific data to become public. It may also see the Indian government’s tax department obtain data from the crypto exchanges or ecosystem. What’s more, it may result in the loss of anonymity by users. This outcome is because users have to reveal their identities. 

Thus, to operate and trade, the users must provide compliance by providing previously private information. Therefore, some stakeholders argue that taxation goes against the basic principles of crypto anonymity. The exposure of users’ identities will remove anonymity and make the once-private data available to the public. 

Why Investors Could Face Hard Times

According to some stakeholders in India, taxation offers many dull prospects for investors. The stakeholders, in this case, fear that the Indian government may impose high taxes on cryptocurrencies. 

In the case that taxes are very high, investors fear adverse outcomes. These negative outcomes include low returns from trading and the limited growth of the industry. For investors, little change may negatively affect the use of cryptocurrencies in the country. Thus, the freedom that crypto-trading offers may be severely finite. 

Indian Government Echoes Improved Security

On the other hand, the move to implement taxation is viewed as a positive by some stakeholders. When the taxation taxes effect, user data and data from the cryptocurrency exchanges will become exposed. While this action may limit financial freedom and prevent anonymity, it may present some positive outcomes. 

The presence of reliable user data may promote improved security measures for cryptocurrencies. The Indian government’s access to trading data may also allow them to observe trading patterns and highlight abnormalities. 

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Thus, taxation may help resolve recurring security issues that have remained problematic. The move may prevent the continued existence of such matters as money laundering.