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Is India doing something about cryptocurrencies?

Q: Many Indians who are tax defaulters have run away from India. I believe Indian tax authorities can do nothing to recover the taxes in such cases; is this true?
A: Until last month, an Indian tax authority could request its foreign counterpart to recover the tax due in India only if a foreign property could be identified as being the fruit of tax evasion in India. The law has now been changed to plug this loophole. Under the new law, even if the Indian tax authority has not identified the foreign property of a tax defaulter, he can approach the foreign tax authorities to recover the tax payable in India by the defaulter who has fled the country. This is possible only where India has entered into a double tax avoidance agreement with a foreign country.
The officer who has jurisdiction over the Indian tax defaulter will need to send a tax recovery certificate to the Central Board of Direct Taxes stating the amount that has to be recovered. The board will then take it up with the competent authority in the foreign country, which will be required to take steps for recovering the tax from the assets of the defaulter in the foreign country. This provision would also apply where a foreign citizen has come to India after evading tax in his own country. The Indian authorities would be duty bound to recover tax from the assets of the foreign citizen in India and pay the amount to the tax authority of the foreign country.
Q: Investors in different parts of the world have been investing in cryptocurrencies. Many have burnt their fingers. Is it legal for persons to deal with cryptocurrencies in India? Should not the government restrict, if not prohibit, dealing in the same?
A: An expert committee was set up to look into the risk factors of cryptocurrencies floated by private entities. According to the committee's report, there is no underlying intrinsic value. Cryptocurrencies do not act as any store of value nor are they a medium of exchange. Further, there are extreme fluctuations in their prices which have caused loss to investors. A draft bill has now been prepared under which a person will be liable to fine or imprisonment if he directly or indirectly mines, generates, holds, deals in or transfers crypto currency or any combination thereof.
However, the committee has suggested that the government, in the future, may consider the introduction of an official digital currency in India. The committee feels that at present there is no clear advantage for the government to come up with an official digital currency. It has recommended that a group should be constituted to consider this issue. If at all an official one is to be launched, an appropriate model should be considered. The committee has recommended that the distributed ledger technology may be adopted as it may give some benefit in financial and non-financial areas and improve access to credit.
Q: I recently purchased a residential property in a housing society. I am told that I will have to pay monthly service charges for the maintenance of the property and there will also be Goods & Services Tax, if applicable. I want to know whether I will be liable to pay GST as the amount involved may be quite large.
A: GST authorities have now taken a decision that flat owners will have to pay GST at the rate of 18 per cent if their monthly contribution to a cooperative housing society or resident welfare association exceeds ?7,500 per month per flat. This would be where the annual turnover of the society or association exceeds ?2 million per annum. In other words, if your society or association which maintains the building charges you less than ?7,500 per month as maintenance charges, no GST will be payable.
On the other hand, if the maintenance charges exceed ?7,500 per month per flat, the entire amount would be taxable and not just the amount exceeding ?7,500. To illustrate, if the monthly maintenance charges are ?8,000, GST at the rate of 18 per cent would be payable on the entire amount of ?8,000. It has further been clarified that if a person owns more than one apartment if the same residential complex and the maintenance charges for each apartment are ?7,500 or less, the exemption from GST will apply though the owner may pay an aggregate amount exceeding ?7,500 every month.
H.P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.