RBI Governor Shaktikanta Das was also present in this meeting. RBI officials believe that cryptocurrencies can become a major medium of exchange and can replace currency in financial transactions taking place in the country and abroad. This helps in regulating the flow of funds in the system. RBI ability may also be weakened. Apart from this, cryptocurrencies are also suspected to be used for financing terrorist activities, money laundering and drug trafficking. This can pose a serious threat to the stability of the country’s financial system.
“Almost all cryptocurrencies are denominated in dollars and issued by foreign private entities. This could lead to dollar domination on a part of the country’s economy which would be against the interest of the country,” officials told the committee members. Officials said this will also have a negative impact on the banking system as these are attractive assets and people can invest their savings in cryptocurrencies, which may result in less resources for banks to lend.
In this year’s budget, the government has made a contribution to the crypto industry. tax policy was announced. Under this, 30 percent capital gains tax has been imposed on digital assets and 1 percent TDS has been imposed on their transfer. This has greatly reduced the trading volume on crypto exchanges. Crypto investors will have to add 30 per cent tax on profits, 1 per cent TDS and possible GST of 28 per cent in addition to exchange fees and additional cess and surcharge. This will make investing in crypto very expensive. This will also have an impact on crypto transactions. Tax authorities are planning to put crypto activities in the category of services that attract the highest Goods and Services Tax (GST) of 28 per cent.
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