Government has the sovereign right to tax cryptocurrency, says Sitharaman

New Delhi, February 11

A day after the Reserve Bank of India Governor, Shaktikanta Das invoked the first financial bubble of the seventeenth century to caution investors about the risk of investing in cryptocurrencies, Union Finance Minister Nirmala Sitharaman said the government had the sovereign right to tax profits made from cryptocurrency transactions.

“I am not going to legalise it or ban it at this stage. Banning or not banning will come subsequently, when consultations give me input,’’ she added while replying to the debate on the Budget in Rajya Sabha on Friday.

The Budget 2022-23 has proposed a 1per centTDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.

The RBI chief had said on Thursday that private cryptocurrencies are a threat to macroeconomic and financial stability. He also said such assets have no underlying value whatsoever, “not even a tulip’’ in a reference to the 17th century ‘tulip mania’, when prices of this flower rose to dizzy levels and investors who had taken forward positions were wiped out when its inflated price, at times equal to a year’s wages, crashed.