Representations of the Ripple, bitcoin, etherum and Litecoin cryptocurrencies Photograph:( Reuters )
The bill, once passed in the parliament, will 'prohibit all private cryptocurrencies in India,' with 'certain exceptions to promote the underlying technology of cryptocurrency and its uses'
The Indian government will give time to the investors to exit from the unregulated cryptocurrency market if the law banning their trade is enacted, according to a newspaper report citing officials familiar with the development.
The Narendra Modi-led government has tabled the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” for the upcoming winter session of Parliament.
The bill, once passed in the parliament, will “prohibit all private cryptocurrencies in India,” with “certain exceptions to promote the underlying technology of cryptocurrency and its uses”. The session is scheduled to start on November 29.
According to the Hindustan Times (HT), which cited two officials close to the development, the investors would be given a buffer time to liquidate their investments, but a tax would be levied on the disinvestment under the capital gains tax rule.
The capital gains tax is imposed on the profit from an investment when a sale of the capital asset takes place. In India, gain or profit from selling the investment is treated as an income, and hence a tax is levied.
The official, who did not wish to be named, told HT that investors will have ample time to exit if they wish from the time the bill is introduced in the Parliament and then passed by the two houses. Additionally, a three-month buffer is likely to be allowed, beginning from the date a potential ban is enacted.
Meanwhile, ever since it was announced that the government would be banning all private cryptocurrencies, panic selling has erupted in the Indian exchanges.
All major cryptocurrencies saw a fall of around 15 per cent or more, with Bitcoin down over 17 per cent, Ethereum falling by close to 15 per cent, and Tether down by almost 18 per cent till Wednesday.
(With inputs from agencies)