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India should introduce ‘more principle-based’ legal framework for digital currency, IT minister says

India’s Minister of State for Electronics and IT, Rajeev Chandrasekhar, has suggested a new regime of virtual currency rules for the ecosystem, the Economic Times reports.

“The Government is working on a comprehensive legal framework that will include legislations like the proposed Digital Personal Data Protection Bill, the National Data Governance Framework, the amended IT rules etc and the upcoming Digital India Act,” Chandrasekhar said.

Chandrasekhar noted that the new rules would be “less prescriptive and more principle-based” to provide for the rapid development of the country’s technology sector, the report noted. The minister’s comments were made at the 2023 Itech Law International Conference, where he urged stakeholders to cross-pollinate ideas for the smooth regulation of the nascent industry.

“Our effort has been to involve as many stakeholders as possible in the process of law-making. It is the government’s legislation as much as it’s the stakeholders’ legislation.,” Chandrasekhar told the attendees.

When asked about the present status of virtual currencies in India, the minister said no law precludes residents from interacting with the asset class. He added that the basic requirements for firms looking to operate in the country’s virtual currency space must seek regulatory consent and play by the book.

India’s government has been criticized over its stance toward the digital asset industry following its imposition of “draconian” tax requirements. Investors have been burdened with a 30% tax on gains without the option of allowing them to offset their losses.

A new budget year is a rare chance to correct the wrongs

Ahead of the presentation of the new Indian budget scheduled for February 1, industry stakeholders are calling for the Finance Ministry to reduce the tax burden on the virtual currency ecosystem. Leading the charge is the Bharat Web 3 Association, made up of service providers like CoinDCX, Zeb Pay, and Polygon, as they make a collective submission for the reduction of the 1% Tax Deductible at Source (TDS).

“This TDS could be brought down to 0.1% on every trade without challenging its efficacy,” said Vikram Subburaj, Giottus’ CEO. “This will bring more capital infusion to the sector.”

However, there are fears that the Indian government might not budge away from its harsh policies toward the sector, given the hard stance of the Reserve Bank of India (RBI).

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