The punishing tax policy on crypto currencies is aimed at shielding investors until regulations for crypto trading are framed. Discuss (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The passage of the Finance Bill containing provisions to tax cryptocurrency leaves no doubt regarding the Centre’s stance on these assets.
· It is clearly worried about the surge in speculative activity on crypto-trading platforms which is luring gullible investors unaware of the risks associated with these instruments.
· Cryptocurrencies have no underlying value and are extremely volatile, increasing the risk of capital loss. Further, the crypto-trading platforms are unregulated, putting investor money at great risk.
· The amendments to the Finance Bill clarified that defining transfer of these assets under Section 2(47) of the Income Tax Act does not mean that they are being recognised as a capital asset.
· The next step, regulating private cryptocurrencies is however likely to be much more complicated with trading activity taking place on similar unregulated platforms globally.
· It is very easy for traders to transact on such platforms which operate beyond any regulator’s glare. A unilateral ban on the trading in India will make traders shift to platforms in other jurisdictions.
· The way forward is to arrive at a global consensus on the legality of trading in these assets and the manner in which such activities should be supervised. Until then, the best way to contain activity in these assets is by taxing them heavily, as the Centre has done.
