3 reasons why Arun Jaitley should talk about bitcoins in his Budget 2018 speech

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Expectations are high from Finance Minister Arun Jaitley ahead of the government's last full Budget in Parliament tomorrow.
Of the many subjects that the Finance Minister is likely to take up in his Budget speech, Arun Jaitley, many feel, should also talk about bitcoins, the cryptocurrency that has become one of the biggest buzzwords in recent times.
BITCOIN TRADING A REALITY IN INDIA
It will be wrong to assume that bitcoin trading is only prevalent in other countries, and is yet to hit the Indian shores. DMK MP Kanimozhi, while speaking in Parliament recently, said that India accounts for nearly 11 per cent of global trading in cryptocurrency such as bitcoins, and sought to know if government planned to regulate them.
The ambivalence around cryptocurrency like bitcoins persists as people are not sure if these can be considered as an investment asset or how exactly earnings (or losses) from bitcoin trading are taxed.
As of now, the government has repeatedly maintained that bitcoins and other forms of cryptocurrency are not legal tender and a committee is "deliberating over all issues related to cryptocurrencies to propose specific actions to be taken".
Going by the figures quoted by DMK MP Kanimozhi, the number of people trading in cryptocurrency is likely to be fairly large. In such a scenario, the government may have to bring bitcoins under some sort of regulation, sooner than later. Budget 2018 can perhaps start the conversation around putting bitcoins and other cryptocurrency under some sort of legal structure.
MORE REVENUE FOR THE GOVERNMENT
Currently, income from bitcoin trading is taxable either under business income or capital gains, depending on the frequency of transaction.
Given the sizeable number of people dealing in bitcoin trading, the government may also consider putting such cryptocurrency transactions in a separate tax bracket altogether.
Putting bitcoin trading or transactions under a high tax bracket, perhaps keeping them over and above the 30 per cent slab, can ensure higher revenue for the government as well.
A resistance from bitcoin traders or firms over high tax rates is unlikely as the sector is looking for formalisation of cryptocurrency.
TAXING THE RICH WON'T HURT
Further, given the complexity of the system and the high valuation of bitcoins, those trading in the cryptocurrency are unlikely to be farmers or middle-class individuals, who form any government's core constituency.
According to reports in December last year, the Income Tax department was set to issue notices to 4-5 lakh high networth individuals (HNIs) trading in bitcoins as part of an investigation into tax evasion charges.
Taxing high networth individuals is unlikely to earn the government criticism, if any, from Opposition quarters as well.

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