Sushil Kumar Modi, a BJP Member or the Rajya Sabha, claims virtual assets and services like cryptocurrencies, online games and digital finance should be taxed higher because of their speculative and non-essential nature. Modi also urged the government to provide firm regulation for those sectors, along with social media and educational technologies.
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More Taxes for Premium Virtual Services
An MoP from the leading BJP party has once again evoked firm regulation and higher levies for a number of digital segments in India. Sushil Kumar Modi had previously pushed the government on providing more progressive legislation on most online industries, media reports remind.
Now he is sponsoring a tax on crypto currency earnings higher than the 30% that was proposed by the Union Finance Minister earlier last month. Modi took part in the discussions of the 2022 financial framework and likened the crypto markets to online gaming and digital lending because of their volatile nature.
The Senator compared crypto trading to legal forms of gambling like horse racing or buying lottery tickets online. A premium form of consumption – and certainly a non-essential public service or commodity – these digital markets are taxed much higher in Japan (55%), Europe (up to 45%) and even the US (37%), Modi pointed out.
Virtual asset earnings are all speculative, he claims, and any profit would be welcome by traders and investors. What is more, even crypto platforms need to be bound to pay the higher GST rate of 28%, up from the current 18%. Given the current growth trend of crypto markets, the Centre should be able to make higher tax revenues on both ends, Modi argues.
Digital Markets Remain Unpredictable
Modi went on, highlighting the immense profits that crypto currencies and other digital assets often bring to investors. The nature of virtual trade invites speculation and systematic risks for all participants. And while the value of crypto is determined by an elusive market logic, the funds that can be withdrawn from India’s financial system are very real and could go untaxed unless the regulatory framework is improved.
In this context, the Senator often takes the debate to the relevance of modern legislation of digital markets. The Information Technology Act dates back to 2000, making it largely inadequate to deal with both current and future tech industries and issues.
Crucially, crypto and real-money gaming are only two examples of business models that need updated rules and laws. Forward-thinking legislation is also needed in fintech, social media and educational technologies (edtech).
The entertainment industry, particularly, has been posting record growth and needs to be looked closely at. Fantasy games are already valued at nearly $3 billion, other casual and real-money online games have seen over 400 million desi consumers play them on their mobiles. Chinese lending apps abound, media reports show, as to social media and edtech apps and platforms.
Many of these are run from offshore locations yet have high impact on India’s society, economy and public life, making their regulation all the more important.