Nepal, which has banned cryptocurrency, watches closely as India announces to introduce one
February 2, 2022 03:50 PM NPT
By: RUDRA KHADKA
KATHMANDU, Feb 2: At a time when the government of Nepal has criminalized any form of transaction of digital currency, the neighboring Indian government has announced to introduce taxes in the introduction and transaction of digital and cryptocurrencies inside the country.
Delivering the budget for the fiscal year 2022/2023 on Tuesday, Indian Finance Minister Nirmala Sitharaman announced that the Reserve Bank of India (RBI) is set to introduce a digital currency and announced a tax waiver of up to 30 percent on income from investment in cryptocurrencies.
In Nepal, the Nepal Rastra Bank (NRB) issued a notice warning of legal action against anyone involved in crypto transactions just a week ago. India approved the buying and selling of cryptocurrencies over two years ago after the Supreme Court of India lifted the ban on cryptocurrencies.
Similarly, the Indian government has also announced the introduction of a digital currency in the country, which has made many people curious regarding its effect on Nepal. According to the former Executive Director of NRB, Nar Bahadur Thapa, the decisions of the Indian government will play a huge role in Nepal. “Due to the open border with India, we have no problem exchanging currency. Unless Nepal reforms its existing policies, its national treasury will become empty soon,” he said.
“With the new policy introduced in India, the government of Nepal needs to do three things,” Thapa said, “First, a thorough study needs to be done. Based on the same study, Nepal should also recognize the cryptocurrency and assimilate the digital currency by levying a profit tax,” he added. Stating that many people are making a profit from investing in cryptocurrencies, he said that the government should also learn to profit from it. He also maintained that many people were still investing in digital currencies secretly as the currency has been criminalized by the government.
Experts have said that as soon as digital currency including cryptocurrency is taxed in Nepal, a separate institution will be set up which will assist in tax fraud. According to Thapa, if Nepal still does not give legitimacy to cryptocurrency, some people will continue to cheat and it cannot be stopped.
NRB Assistant Spokesperson Narayan Prasad said that it is unlikely that Nepal will follow the steps of India in terms of cryptocurrency. “Investments made by cryptocurrency cannot be regulated and no one is to blame when things go wrong,” he said.
Meanwhile, experts have warned of more problems in the future if Nepal keeps repeating its mistakes. “If Nepal is to accept the digital currency as India did, it will help in controlling instability and help to provide cheap loans as well,” Thapa informed Republica.
In the past few years, investments in cryptocurrencies have skyrocketed across the world and in India. The number of investors has also increased, citing the quick and easy return made on crypto investments. “The virtual digital business is growing significantly. Therefore, it is very important to bring the income from this under the tax net,” said Indian Finance Minister Nirmala Sitharaman while announcing the budget.
According to various sources, about 110 million Indians have invested more than USD6 billion in cryptocurrencies. Although the number of Nepali investors in cryptocurrency is not certain, the number is estimated to be in thousands. India is the first nation in Southeast Asia to introduce digital currency under its government. Despite digital currency being illegal in Nepal, investment in cryptocurrency is increasing across the world.
So far, governments of the US, European Union, Canada, Australia have recognized the transactions of bitcoin. Hundreds of transactions are made through the use of various digital currencies every day. Of them, Bitcoin is one of the most renowned cryptocurrency in the world.