Crypto Bill, Ads And Tax: What Finance Minister Nirmala Sitharaman Said In Parliament
Sitharaman said India is taking measures to prevent illegal activities and create awareness about cryptocurrencies.
While the bill to regulate cryptocurrency is expected to be tabled in parliament, Finance Minister Nirmala Sitharaman assured lawmakers that India is taking adequate measures to prevent illegal activities and create awareness.
“The Government of India, SEBI (market regulator) as well as the RBI (central bank) have taken steps to create awareness and caution youngsters about the risks of investing in cryptocurrency," Sitharaman said on Tuesday while responding to queries in the Rajya Sabha. The risk of "illegal transfers and not-so-desirable activities" is also being monitored, she said.
Parliamentarians across parties raised concerns about aggressive advertisements by crypto exchanges. They also flagged the possibility of unregulated digital currencies being used for money-laundering and other dubious activities.
While the finance minister said the Securities and Exchange Board of India and the Reserve Bank of India will take more steps to curb illegal activities, there was "no way" to block crypto advertisements. The government, however, is studying the guidelines of the Advertisement Standards Council of India and is also looking into regulations to ensure that misleading advertisements are checked.
To questions that if the government had collected tax on crypto income, Sitharaman said she didn't have ready information on it. The Finance Ministry, however, is discussing a separate framework for taxing income from trading in digital tokens.
Any such framework, however, will be an addition to the reworked Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The bill is scheduled to be tabled in the winter session of parliament.
Read the edited excerpts from the 'Question Hour' of the Rajya Sabha here:
NEERAJ SHEKHAR: Someone just said, if you log into the internet, there’s are a lot of advertisements of these (Crypto currencies) and our youngsters are investing their money into it. So, my question is, till the bill is out, can there be a way drafted by the Government of India to block these advertisements?
NIRMALA SITHARAMAN: There’s no way to block these advertisements but the Government of India, SEBI as well as the RBI has taken steps to create awareness and caution youngsters about the risks of investing in Cryptocurrency. Just as I said, they can take further and more steps towards creating awareness but we are close to tabling the bill in the parliament.
SUJEET KUMAR: With the proliferation of crypto exchanges and the explosion of crypto transactions, it is inevitable that scams, frauds as Honorable Member Jadhavji has observed, money laundering also is going to happen in a massive way. I suspect sir, anti-national forces also try to use these platforms to hurt the Indian economy and possibly destabilise the Indian economy. So, is the government aware of any such move by anti-national forces and if yes, what is it planning to do?
NIRMALA SITHARAMAN: The risk that this can lead to some kind of illegal transfers to not so desirable activities are matters which are well in the regular course also, being monitored by institutions, by enforcement authorities and so on. The Ministry of Finance benefits from inputs from them. So, I would only tell the member that these are matters which are definitely being discussed at various levels.
SUSHIL KUMAR MODI: In the last four months, a flurry of misleading ad on TV print media and social media and they are promising heaven to the investors and during the World Cup 2020, more than 50 crore was spent by crypto exchange companies. So, is there any plan to ban such advertisements? Because the statements which have come in from the RBI haven’t been read by anyone. So, are you going to insert some advertisements prominently in all the regional, that is Hindi and English newspapers number one. Number two because these ads come in without any disclaimers so, is the Government of India thinking of banning such advertisements which are misleading and because of which, people can incur heavy losses? So, is the Government of India contemplating to ban such misleading advertisements till the bill comes because the last time also, it was mentioned in the bulletin but it could not come into the house. So, will the Government of India think about banning these advertisements?
NIRMALA SITHARAMAN: Two things, last time also there was a bill mentioned and it didn't happen. I just want to remind the honourable member that yes last time there was a bill proposed but subsequently because there were other dimensions which in the real time, we thought it was important to bring into the bill, that bill had been reworked and in a way the bill which is coming now is a new bill but never mind the work done on that have all been taken on board here. So intent was either we improve that bill or come up with a bill which is going to be far more recent.
So that intent of getting that bill at that time was there, in genuine intent and now we are coming up with a new bill. So, it's not that the last time we just put it there or didn't want to come up with one. So, leading to a suspicion that this time also we are putting a bill up or we may not come up with one, let me be clear on that. That earlier attempt was definitely to come up with a bill which the house can consider but later because rapidly a lot of things had to come into play, we had started working on a new bill and this is the bill which is now being proposed and this bill—once the cabinet clears it, will come into the house. That is one thing. Second, about the misleading advertisements and about we banning them, I want to inform the honourable member who's been a finance minister earlier in Bihar and has also been in influential and guiding positions in the GST Council whose advice all of us have benefited from, so I value his question. With the Advertisement Standards Council of India, which governs all advertisements, their guidelines are being studied and the regulations that they have are all being looked into. So that we can take if necessary, some kind of a position or a decision to say how we are going to handle this. I can inform the honourable member.
SUSHIL KUMAR MODI: My question number two was that, is the government is seeking to make a separate legal framework for NFT? It has not been answered in this answer. So, I would like to say that there should be a separate legal framework for NFTs, it should not be a part of the cryptocurrency act. So, is the government thinking of a separate, legal framework for NFT and number two, I would like to know how many people have paid income tax on cryptocurrencies and how much tax has been collected? Can the minister tell the house, how many people have paid income tax on income from cryptocurrency and how much tax has been collected?
NIRMALA SITHARAMAN: I don't have the ready information on how much tax has been collected on cryptocurrency or how much has been paid on it and as regards NFT, the non-fungible tokens, honourable member desires having a separate legal framework. At this moment I may not be able to say whether I will give a separate framework or not but certainly, as I said, all these matters are being discussed.
VIJAYASAI REDDY: The National Institute of Public Finance and Policy has recommended that the four-key slab, that is, a separate system of 5%, 12%, 18% and 28% can smoothly be replaced by a 3-tier slab system of 8%, 15% and 30% without causing any loss of revenue to the exchequer . I would like to know from the honourable finance minister what steps are being taken, whether such a proposal is being accepted and whether it is advisable to accept this proposal or what is the contemplation?
NIRMALA SITHARAMAN: That is a very pertinent question as regards the GST rates, although of course we're talking about compensation in this question, I take this opportunity to inform member Vijaysai Reddy that the GST Council probably a year and a half ago, cursorily, it didn't go into depth—talked about the need for rate rationalisation related discussions. So, three rates to two, four rates to one all that cursorily was mentioned that at some point in time we need to talk about it because at the point in time when the GST was brought in, many factors determined as to why we wanted to have these four slabs and so on and the revenue neutrality principle also required that we had full rates. But with time the GST Council also felt that this has to be taken up some point in time and the revenue neutrality has been upset in some ways. At the same time, if you're talking about one tax one nation, are four slabs required, should there be one rate—this has been a question because of I would presume the pandemic and also the second wave and also the issues of compensation, the requirement for borrowing—several such factors have probably played in the minds of the council and I'm not speaking for them, but I'm giving you a sense of what prevailed in the house saying probably because we were attending to these things, the very required debate on rate rationalisation has not even come up. That is where we are.