A day after the Budget announcement on taxing cryptocurrency profits and loss stunned investors, the top tax officer of the Indian government told Business Today TV that the 30 per cent rate is not high, adding that the rate could be even higher.
In an exclusive conversation, Central Board of Direct Taxes (CBDT) Chairman JB Mohapatra said, "I do not think the 30 per cent tax rate is high for cryptocurrencies. Companies are being taxed at 30 per cent. It is not the maximum rate. It is not the upper end of the taxing powers of the government. It could have been more but we pegged it at 30 per cent”.
Mohapatra also clarified that the act of levying a tax should not be equated with conferring legitimacy to cryptocurrencies.
"Taxation does not attach any legitimacy or legality to the transaction which has been affected for surplus or deficit in a crypto trade. We are not mandated to question the legality of any business or profession or transaction. We have been mandated to look at the taxation aspect of the surplus generated after the trade. Just because it is taxed, does not make it legal", the CBDT chairman said.
Mohapatra also underlined that even if crypto trade is made illegal through legislation, the profits on trade will continue to be taxed.
"We have knowledge that the number of crypto exchanges working in India is 40. The biggest exchange has a turnover of Rs 34,000 crore per annum. The size of the market is quite large. Unconfirmed reports suggest about 10 crore people have invested in cryptocurrencies," he said, revealing for the first time the size and scale of the cryptocurrency ecosystem in India.
"We are interested in knowing the sources of the investment whether it is legitimate source and whether it is going to legitimate source," he added.
The CBDT chairman also went on to explain that if the source is illicit, not just the surplus but the illicit source will also be taxed.
Mohapatra said that the CBDT has been working on the intricacies of crypto trade for the last five years. Different jurisdictions of the income tax authority have been probing the affairs of the exchanges, as a result of which the CBDT now has the knowledge of crypto trade in India.
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