Taxing cryptos, a sovereign right; ban another issue: FM 

Finance Minister Nirmala Sitharaman on Friday said taxing cryptocurrency is the right of the sovereign, and that the issue of banning or not banning it will be decided separately.

“Whether it is legitimate or illegitimate, it is a different question, but I will tax because it is a sovereign right to tax,” Sitharaman said while replying to a debate on the General Discussion on Budget in Rajya Sabha. The Lok Sabha had completed the discussion on Thursday. With this, the Parliament has concluded the first part of the Budget. Demands for Grants and tax proposals will be taken up for debate and passage when both Houses will reassemble after recess on March 14.

The issue of taxation on crypto, for which the Budget used the term Virtual Digital Asset (VDA), has been hogging the limelight after it was proposed to levy a 30 per cent tax on it beside the Tax Deducted at Source (TDS). Also gifting of such asset will be taxed in the hand of the recipient. The government has also clarified that consultation has been happening on the regulatory issue.

Economy

Sitharaman said India has managed to contain retail inflation based on the consumer price index at a little over 6 per cent even as the Gross Domestic Product (GDP) contracted by over ₹9.5-lakh crore in FY21. She pointed out that the retail inflation was 9.1 per cent during the financial crisis of 2008-09, while it is at 6.2 per cent during the Covid-19 pandemic, which has a bigger impact on the economy. It may be noted that in 2008-09, the decline in GDP was just over ₹2.12-lakh crore.

She also told the House that capital spending gives much more multiplier than the revenue route, and therefore, the government has increased public capital spending to boost the economy. She informed that the government is also encouraging start-ups and that resulted in the creation of many unicorns during the pandemic.

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‘No cause to worry’

She added there was no cause to worry because of different numbers of GDP in the Economic Survey and Budget documents, as it was a result of sources of data being different. About public spending, the minister said ₹7.5-lakh crore spending will create jobs, and employment creation is not limited to 60 lakh jobs from productivity linked incentive plan for 14 sectors.

The MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) was infested with ghost accounts and people not born were receiving money, she said, adding that it is a demand-driven programme meant to provide jobs to rural unemployed in the lean season, and whenever demand comes, it is funded.

She said ₹73,000 crore has been provided for rural employment guarantee scheme and will give more if the demand arises. Fertiliser subsidy rose from the budgeted ₹79,530 crore for FY22 to ₹1.4-lakh crore in the revised estimates and shows the government is receptive to the needs, she added.

Replying to the Opposition’s charges that small businesses were shuttered, Sitharaman stated that 67 per cent of the MSMEs were temporarily shut due to the lockdown.

India has witnessed breaching the 6 per cent tolerance limit for inflation on 6 occasions since 2014 (when the NDA government came into power at the Centre) as inflation management is robust, she told the House. Sitharaman said there is no question of slowdown or recession, citing estimated 9.2 per cent GDP growth in the current fiscal.

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