However, industry experts and legal advisors point out the government has not said anything about legitimate cryptocurrency exchanges, which means they hope these will continue trading. There is also no clarity in the Budget
on the tax treatment of cryptocurrency. “Most likely it will be treated as a capital asset for tax unless you are in the business of buying and selling, in which case it will be business income,” said an expert.
What was encouraging in Jaitley’s speech was that he clarified that “the distributed ledger system or the blockchain technology allows organisation of any chain of records or transactions without the need of intermediaries”.
How this will be done is not spelt out, but the banking and insurance industries are already working on using blockchain. The bullion and commodity businesses are also studying the use of this technology.
There are over 4 million users of cryptocurrencies in India.
Monish Panda, founder, Monish Panda and Associates said, “The finance minister’s statement indicates that the government will now either come out with a legislative mechanism or make suitable amendments in existing legislation to ensure that dealing and trading in cryptocurrencies is made illegal.”