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A Cryptic Issue

India has imposed income tax on transactions through private digital currency or cryptocurrency in the budget for 2022-23 financial year, apart from introducing Tax Deducted at Source (TDS) to collect the tax at the source from which a person’s income is received. At the same time, Nirmala Sitharaman, the Finance Minister of India, has reiterated that failure to establish global control over such digital assets would increase the risk of illegal financial transactions and encourage terrorist activities.

Speaking at the Spring Meetings of the World Bank (WB) and the International Monetary Fund (IMF) in Washington DC, the Indian minister recently said that levying taxes helps the Government to find the source of the wealth, but the purpose of the transaction of the wealth could not be controlled. “That is why international surveillance is required,” she told the audience.

Meanwhile, Indian National Congress (INC), the main Opposition party, has strongly criticised the Government of India, stating that the Narendra Modi Administration is talking about the risk of using cryptocurrency, but also collects taxes from it. According to the INC, the Government is pushing the country towards risk in order to improve the condition of the treasury.

Finance Minister Sitharaman has explained that cryptocurrencies can create different risks for different countries. Hence, global control is required through consensus. The minister also informed the WB and the IMF that the Reserve Bank of India (RBI, India’s Central Bank) would introduce the State-owned digital currency later this year.

Sitharaman (R) with IMF MD Krisalina Georgieva

In Washington DC, Sitharaman held talks with IMF Managing Director Krisalina Georgieva on the sidelines of G20 Finance Ministers and Central Bank Governors Meeting to discuss India’s current economic situation. The Indian Ministry of Finance has issued a statement, saying: “During the meeting, both sides discussed India’s economic performance and prospects, as well as issues of importance to India.” Sitharaman also held a bilateral meeting with her Sri Lankan counterpart Ali Sabry to discuss the economic situation in the island nation. According to the statement, the Indian minister “assured Sri Lanka that as a close friend and good neighbour, India will try to extend all possible cooperation and assistance” to Colombo.

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