After Eco Survey, will FM’s Budget also remain silent on cryptos?

While experts believe there are many reasons behind this, the primary among them is that there is yet to be a unilateral consensus inside the government, in the Ministry of Finance, and even in Parliament, they said. The ambiguity on legislation still hangs in the air, according to experts.

It was expected that the Economic Survey will have nothing about the crypto industry as the government is still trying to figure out what crypto is and hence how it can impact, said Edul Patel, Co-founder and CEO, Mudrex. Though the industry does not expect the crypto bill to be put on the table in the budget session, we are hopeful that some cat will be out of the FM’s bag, he added.

The Reserve Bank of India (RBI) has also highlighted issues, including the financial stability impact of such virtual currencies. The government is also adopting a wait and watch stance.

“The central bank has always been vocal about its concerns about private digital currencies, citing macroeconomic and financial stability issues,” said Raj A Kapoor, Founder, India Blockchain Alliance.

The present Economic Survey may have omitted virtual currencies but has taken cognisance of the fact that they would need to plug in the gaps, separate the wheat from the chaff and ensure robust framework inputs before taking a giant stride in this direction, he added.

A legislative framework for virtual currencies will also require amendment of some existing laws and the government awaits technical inputs and recommendations from the RBI after the pilot, he further said.

Recently, Prime Minister Narendra Modi, too, has asked for a synchronised global discussion on crypto regulations at the World Economic Forum.

There are also indications that the Centre is considering levying TDS /TCS on the sale and purchase of cryptocurrencies above a certain threshold, suggested the expert. Clarity on this aspect is highly anticipated.

The Economic Survey report has highlighted that the revenue figures from direct as well as indirect taxation have beaten all expectations, said Sharat Chandra, VP- Research & Strategy, EarthID, an Identity management platform

“We strongly believe crypto taxation will bring in more revenue for the government in FY22-23 and allow the government more space for boosting fiscal spending and pare down fiscal deficit numbers,” he added.

The industry expects that FM would give some direction on taxation for investors in crypto assets as presently there is a complete lack of consensus over the taxation framework and a well-structured taxation framework.

“If the current policy emphasis is on ‘scenario analysis, identifying vulnerable sections, and understanding policy options’, then the Survey missed a great opportunity to strengthen public debate around blockchain adoption in India. Regulatory uncertainty is the biggest problem for any emerging industry, and the same is true for blockchain technology in India,” said Purushottam Anand, Founder, Crypto Legal, a blockchain law firm.

“Its complete omission from the Economic Survey, on the ground that it remains a ‘matter of debate’, is hard to understand,” he added. “The preface itself argues for a shift from pre-determined planning to a more agile approach.”

This omission seems to confirm speculations that the government is unlikely to introduce the much-awaited crypto Bill soon though the silver lining is to take a progressive and balanced approach towards blockchain innovation, which is encouraging for the long term, said Anand.