India may treat cryptos as a financial asset

The legislation may stipulate a minimum amount for investments in digital currencies.

Representations of virtual currency bitcoin are seen through broken glass in this illustration taken June 25, 2021.

Representations of virtual currency bitcoin are seen through broken glass in this illustration taken June 25, 2021.

REUTERS/Dado Ruvic/Illustration

Question: I read in the press that the Indian government is bringing in legislation to rein in crypto currencies. Is this a good policy having regard to the fact that e-currencies are becoming popular throughout the world?

Answer: A bill is likely to be introduced in the Winter Session of Parliament starting from the end of this month. The object is to treat crypto currencies as a financial asset but at the same time safeguarding the interest of retail and small investors. The legislation may stipulate a minimum amount for investments in digital currencies. However, these currencies will not be usable as legal tender. It is also possible that the legislation may prohibit all private crypto currencies but provide exceptions with a view to promote the technology of crypto currency and its uses. The Reserve Bank of India is in favour of putting effective curbs on digital currencies as it may affect the nation’s macroeconomic and financial stability. In the budget to be introduced on 1st February, 2022, capital gains made from transfer of crypto currencies are likely to be brought to tax.

Question: My son has set up a successful enterprise in India, being one of the early startups. His venture has attracted foreign private equity investors. He now wants to expand his business to the United Kingdom and for this purpose he may shift for a couple of years to London. Is it possible to do so and what are the prospects, having regard to competition from American and European companies?

Asnwer: After Britain’s exit from the European Union, the British government is going all out to attract foreign investment. Recently, the United Nations Conference on Trade and Development (UNCTAD) in its report has stated that the UK is emerging as an attractive foreign direct investment destination which is the second highest in the world. Indian enterprises are the second largest investors in the UK after America. New immigration rules have been framed to make it possible for entrepreneurs to establish offices and subsidiary companies in Britain. The Sole Representative Visa which is issued by the UK Government permits an employee of a foreign business to set up a branch or wholly-owned subsidiary company in the UK. The applicant must have the skill, experience and knowledge to run the business in the UK and must have full authority to take decisions on behalf of the parent company. Therefore, your son would be ideally eligible to apply for such a visa if he intends to shift base for a limited period of time in order to set up a branch or subsidiary company in the UK.

Question: I specialise in intellectual property branch of the law. I would like to shift my office back to India next year as I am told that this branch of the law is booming. Can you give me some information regarding this?

Answer: According to the latest data which is available from the World Intellectual Property Organisation, global filings of patents, trademarks and designs have shown considerable surge. This indicates the resilience of human innovation capabilities even during a period of economic turmoil as a result of the Covid pandemic. The centre of gravity for IP filings has shifted to Asia as a result of maximum number of applications being filed from this region with China, India and South Korea being at the top. The double digit growth in trademarks filing, being 15 per cent in 2020, has proved that new products and services are being brought to the market. Therefore, you certainly have sound prospects for setting up an office in India where the share of trademark and patent filings relate to the surgical, medical and pharmaceutical sectors.

H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India.

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