FUTURE OF CRYPTO MARKET IN INDIA

The crypto currency and crypto market have always been controversial right from the beginning. Mainly, because the crypto currencies like Bitcoin, Ethereum and other they are decentralised currencies based on the block chain technology and a result they fall outside the regulation of the government and Central Bank.

While many believe that the crypto currency are the future of transactions and mean while they consider it as a good hedge against inflation. The government's and Central banks around the world on other hand are of the view that crypto currencies cannot be treated as a legal tender as they are not only volatile, but also very risky due to its decentralised & anonymous nature which also makes it vulnerable for misuse by organise criminals and those who are involved in money laundering. So due to all these factors most government and Central banks Around the world have taken stand against the crypto currency

India's stand on this

The RBI in past as well opposed the crypto market in various way and infact in 2018 , the RBI even directed banks not to provide any services to crypto currency exchangers and wallet. But in 2020 there was a major break through when the Supreme court stepped in and revoke this orders of RBI which led to exponential growth of crypto market in India. The reversal of this order by SC was aided by the break out of the COVID pandemic and in combination it led to the massive adoption of crypto currency as a result of which millions of India's today have invested in the crypto currency and are known to be transacting in crypto as well.

 So following this wide spread adoption and considering the tremendous advantages of block chain technology that underlies crypto currencies the government proposed for the regulation of this digital assets. Recently, it was reported that government has already drafted a bill and it was expected to tabeleed in the parliament during last year winter session. But due to various hurdles and unresolved issues the government has tried to indirectly regulate the crypto market.

During the recent budget it has proposed a flat 30% tax will be imposed on all income generated through the transactions of virtual digital asset which include crypto currencies.

They have decided for this high tax to keep small investors away and protect them from the volatility of this market which is of very high risk. Budget also says that any losses on a crypto transactions cannot be offset against the profit to claim tax reductions. This feature is however is offered when you suffer losses in your investment in stock market. Then it also propose a TDS of 1% on all the crypto transactions so that the transactions can be captured at the source itself which will help the tax authorities to monitor tax compliance in this regard. The budget also made it very clear that crypto currency will never be adopted as legal tender. Instead the government has proposed a introduction of digital rupee based on block chain technology and this will be issued and maintained by central Bank and such a central Bank digital currency is expected to bring efficiency into India's digital economy.