On March 28, a member of BJP’s Rajya Sabha and former Deputy Chief Minister of Bihar Sushil Kumar Modi called on the government to increase the tax on cryptocurrencies to the current rate of 30%, saying that he would acted as a form of gambling, and countries such as Japan, Germany, France and Austria imposed up to 40-50% taxes. In an exclusive interview with Outlook Money, he shares his views on cryptocurrencies and blockchain. Edited excerpts:
Q: Why do you think the tax on cryptocurrencies and digital assets should be higher than 30%?
Sushil Kumar Modi: The main reason is that I think (trading) cryptocurrencies is a game of pure money. Even the government has declared that it is a completely speculative market and is similar to gambling, (purchase) lottery and horse racing. Also, we want to discourage this industry because no one knows when this bubble will burst and millions of people will be financially ruined. This is the reason why the government kept this 30% (tax) bracket. But we have seen that several countries like Japan have kept the slab at 40-50%. I believe crypto is like tobacco or alcohol. As the government is facing crypto categorization issues, I requested that they make a new slab and impose more taxes on it so that the government can get revenue and people can be discouraged from investing in this volatile asset.
Q: What are your thoughts on the GST (goods and services tax) on cryptocurrencies?
Modi: For now, there is no specific GST on cryptocurrency; it is only 18 percent on exchanges because they provide services. So for that particular service they have to give GST already set. However, if we look at gambling-like industries, there is GST on the whole transaction. For example, if you buy a lottery ticket for Rs 100, you have to pay 28% more. If you bet Rs 1 lakh in a casino, then you have to pay Rs 28,000 as GST, which is apart from the service provider tax. There should be a tax on the total value of the transaction.
It is now up to the GST Board to impose a tax on the entire transaction, just as it imposes a 3% GST on gold. Our primary motive should be to discourage the entire industry and business from crypto.
Crypto is gambling, the Indian government should reconsider and increase the cryptocurrency tax from the current rate of 30%.
– Sushil Kumar Modi, BJP Bihar pic.twitter.com/44lBmekTej
— Crypto India 🔑 (@CryptooIndia) March 28, 2022
Q: Gaurav Gogoi, Congressman and MP for Lok Sabha, says the government is giving mixed signals regarding cryptocurrencies in India. Why is the government not providing clarity on crypto regulations?
Modi: This subject is so complex that immediate clarity is not possible. The government is discussing this subject with institutions such as the IMF (International Monetary Fund) and the World Bank and hopes to publish a consultation document soon. The government is in no mood to make a hasty decision as this technology is new to all of us.
Currently, there is confusion about this industry across the world – whether to ban it or not; how to approach the regulations, etc. It is necessary to adopt a common vision of this new technology. All in all, it’s gambling. There’s no intrinsic value behind this new technology. It’s code-based only, and it’s not like traditional assets like gold where we have something to show people.
Q: Won’t this suppress innovation and demotivate young people?
Modi: Are “.com” and “internet” the same? We do not discourage the blockchain technology on which this cryptocurrency is based. There are several possibilities for blockchain (use) such as land records, health records, counting, etc. There is no benefit to cryptocurrency for this country. I ask the young people of this nation not to go into cryptocurrency.
Moreover, we have given enough time for the small investor to withdraw their money and leave this industry.
Q: Should cryptocurrencies be banned in India?
Modi: I don’t want to give an opinion on whether crypto should be banned or not. This is a question that needs a wider discussion and we have to wait for some time for it. But if the government bans crypto, it will have no function in India, no standards regarding KYC will work. So whatever things (transactions) happen, they would all be illegal. Also, “effective prohibition” is important.
Mining cryptos is very difficult in India. Countries with dire economies, such as El Salvador and Ukraine, have legalized it. (Globally, setting up a) crypto regulation is not easy.
Q: According to the crypto industry, a TDS of 1% is very high.
Modi: 1% TDS is not a burden. It is adjustable later. It (TDS) was imposed to track the number of investors. Overall, from what I understand, the government wants to discourage young people from (investing in) cryptos. We want to directly prevent people from jumping into this crypto pit.