Taxing income doesn’t give private cryptos legitimacy: FM Sitharaman

At the customary post-Budget media interactions, Finance Minister Nirmala Sitharaman and her topmost bureaucrats touched upon a number of issues. The minister said the government taxing income from digital virtual assets did not give them legitimacy and that issue was being dealt separately in the planned cryptocurrency Bill. She also expressed confidence that the Budget targets were achievable. Excerpts:

On cryptocurrencies

There will be a digital currency launched by the RBI. Even if it is a cryptocurrency, only the central bank has the authority to issue a currency. Anything outside of that is not a currency, despite the fact that we refer to them as such. Nothing prevents me from taxing the gains that are being earned through buying and selling. They do not acquire legitimacy through taxation. We are not levying taxes on the digital rupee, which has not yet been released. Everything else is an asset made by a person, and if any gains are earned from selling it, they will be taxed at a rate of 30%. By enforcing a 1% tax deducted at source, we are also monitoring every transaction made in the cryptocurrency sector. A paper has been distributed, and we are getting feedback. Additionally, public stakeholders are contributing. Therefore, regulation will follow that procedure, but we won’t wait for regulation before taxing those who profit from such assets.

On Budget estimates

In the February 2021 Budget, we were told we had been conservative, but we were right in our assessment. And being conservative is not being overly optimistic. We are sure we will achieve the numbers, and will probably top them.

On revenues

If revenues are compared to the size of GDP, excise duty cannot be linked to that because it doesn’t increase as prices go up. So if excise duty collection is removed from the revised estimates, projected growth in revenues is 14 per cent, said Revenue Secretary Tarun Bajaj. This is not conservative, but a very pragmatic number, and the government will make all attempts to achieve it.