The government is “fairly ready” with a consultation paper on cryptocurrency, a key government official said here on Monday. Another top official said advance action on bank privatisation is under way.
“We have taken a deep dive into consulting with not just the domestic and institutional stakeholders but also organisations such as IMF and World Bank. We hope that we will soon be in a position to finalise our consultation paper,” Economic Affairs Secretary Ajay Seth said here on the sidelines of a press conference addressed by senior officials, including Finance Secretary TV Somnathan, to announce special programmes during the “Azadi ka Amrit Mahotsav”.
The remarks come at a time when India is preparing to collect the first instalment of tax on virtual digital currency, a nomenclature used by the government for cryptocurrency and similar digital instruments. The Finance Act, 2022, has proposed that any income from the transfer of VDA will be taxed at a rate of 30 per cent.
Also, as per the provisions of Section 115 BBH in the Income Tax Act, 1961, loss from the transfer of a VDA will not be allowed to set off against income arising from the transfer of another VDA. New norms have come into effect from April 1 and the first instalment of advance tax is due on June 15.
The government has repeatedly said that taxation does not mean granting legality to crypto and that regulation will be announced separately. The consultation paper is the first step towards that. Seth said that a collective global response is needed to deal with the challenges posed by crypto, and India would look at regulations enforced in other countries before deciding how it would regulate.
This appears to be a reiteration of Prime Minister Narendra Modi’s remarks during his address to the World Economic Forum when he took the example of cryptocurrency and said: “The kind of technology that is associated with it, the decisions taken by a single country will be inadequate to deal with its challenges. We have to have a common mindset.”
Meanwhile, the Financial Services Secretary, who was also present during the curtain raiser event, said advance action is under way for the privatisation of two public sector banks in pursuance of the announcement made by Finance Minister Nirmala Sitharaman.
In the Union Budget for 2021-22, the government announced its intent to take up the privatisation of two PSBs in the year and approved a policy of strategic disinvestment of public sector enterprises. “In so far as banking privatisation is concerned, there is already a statement on the floor of the house by the Finance Minister for making enabling provision,” he said.
The government think-tank NITI Aayog has already suggested two banks and one insurance company to the Core Group of Secretaries on Disinvestment for privatisation. Though the names have not been made public, there are indications that these banks could be the Central Bank of India and Indian Overseas Bank.
Revenue loss from custom duty cut
An official said on Monday that the government estimates a revenue loss of ₹10,000–15,000 crore annually due to the recent recalibration in customs duty on iron and steel and plastic.
The government, with effect from May 22, waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry. The duty on the import of raw materials used in the plastic industry has also been reduced to lower the cost of domestic manufacturing. Also, to increase domestic availability, the duty on exports of iron ore has been hiked up to 50 per cent, and a few steel intermediaries to 15 per cent.
The customs duty changes in raw materials and intermediaries for iron, steel, and plastic were aimed at reducing their prices and also lowering the cost of domestic manufacturing.