Whether trading of dead roots of paddy harvest is legal or not? Please mention a law supporting or opposing the legal status of the trade of these dead roots. Nothing is there. You can find burning stubble is punishable under pollution law. Now, whether burning such stubble in your village kitchen after removal from the farm is legal. Please check.
Anything not (expressly) prohibited is permitted unless it is a dictatorial regime. The Virtual Digital Asset (VDA) has the same status. It is allowed as not banned. Regulators issued warnings against trade and investment, but these are just precautionary notes. The Virtual Digital Asset may not always be a financial asset or cryptocurrency.
According to the definition inserted in the Income Tax Act, it may be a code, number, token, non-fungible token, any other token of similar nature, any other digital asset. It may include cryptocurrency, but in my opinion, it does not central bank digital currency. Central Bank Digital Currency (CBDC), like Digital Rupee, should be defined as currency by their respective issuer countries. It may attract impact later from the Reserve Bank of India under the Foreign Exchange Management Act.
In the budget 2022, the Government announced a tax on the profit earned from trading the virtual digital asset. Is it a progressive step towards the legality of cryptocurrency? No, it is not. Taxation does not determine the legitimacy of a transaction or trade. We have many examples.
Liquor trade attracts tax in India. Is liquor trade legal? There is no perfect yes. In Gujarat and Bihar, it is not legal to trade at all. In Maharastra, no one can purchase it without a licence (even though most of us do not care to have such a licence). So, a sale to a person who does not have a licence may not be good in law. In the rest of India, you cannot purchase beyond a specific limit without an additional license for the party etc. The sale of liquor is not legal if made to a person below a certain age. But, in all cases income of such trade attract tax.
Presently, the lottery is legal to trade in only a few states in India. But, the income from the lottery is lawful all over India and attract a handsome income tax.
Can a person purchase a property in the name of his father or mother? Is it legal? Please read the provision of Benami prohibition law.
These examples show that taxation, the colour of income, and the legality of a transaction are an exciting interplay of transactions and rules – regulations.
It is also premature to say if this crypto tax will attract handsome tax revenue for the Government. The legal status of the transaction is not clear. Otherwise, the lottery tax should have been a jackpot for the Government. After initial cheers, the market interpreted the actual intention to discourage crypto-currency trade.
One reason to announce the tax is an expectation of the ministry to determine the legality of the cryptocurrency trade during the current financial year. The second reason is to track and check these transactions through tax deductions at the source.