A Source of Tax Revenue Maybe?
Bitcoin valuations tumbled nearly 20 per cent between January 5 and 12 on news that South Korea was planning a trading ban on digital currencies, even as the cryptocurrency continued to be under the scrutiny of Indian authorities.
A cryptocurrency is a digital asset designed to work as a medium of exchange. The income tax department, which had conducted searches at the offices of bitcoin exchanges in India, is now assessing the overall size of the cryptocurrency market. Its survey revealed 0.6 million active cryptocurrency traders in the country (unofficial figures put this at several times more) in nine cryptocurrency exchanges. Up to Rs 17,800 crore has been traded on these exchanges. Reports quoting the survey said a 25yearold, who had invested Rs 25 lakh in bitcoins, has seen the valuations of the currency he held multiplying to Rs 760 crore. The IT department is trying to work out a way of assessing these virtual currencies for tax purposes. One view is that cryptocurrencies held for long periods should be considered capital assets and taxed accordingly.
The value of bitcoins had spiked 2,000 per cent in the period JanuaryDecember 2017, touching approximately Rs 12.5 lakh apiece on December 16. But it has steadily fallen since to touch Rs 8.72 lakh as on January 15, 2018. South Korea announced on January 11 that a law to stop cryptocurrency trading was imminent. Two of their largest cryptocurrency exchanges, Coinone and Bithumb, were raided the same day, sending the currency crashing.
In India, entrepreneurs are watching the developments with interest, with some reports claiming Reliance Jio is set to enter the cryptocurrency space. Company sources, however, termed the reports as speculative, given the lack of clarity in regulations and the highly volatile nature of cryptocurrency. Reliance chairman Mukesh Ambani had said recently that emerging technologies, such as artificial intelligence and blockchain, would be of interest going forward. Surely, the cryptocurrency story is far from over.