Government of India’s Stance on Intellectual Property Rights Protection for Virtual Digital Assets – Fin Tech

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The term “virtual digital assets” is used in the finance bill to refer to both cryptocurrencies and NFTs. The criteria for identifying bitcoins or similar applications as virtual digital assets have been intentionally broadened. Apart from distinctions in their characteristics, cryptocurrencies serve as payment systems in which units are transferable and have a certain value.

If a cryptocurrency meets the following conditions, it is considered a virtual digital asset and is taxable under the Income Tax Act 1961:

  • It can take the form of data, code, numbers or tokens.

  • It is somehow created, cryptographically or otherwise

  • It performs the function of a numerical representation of the value.

  • It has intrinsic value; and

  • He has the ability to store and transfer his units or tokens.

Government-issued digital currencies, both domestic and international, are expressly excluded from the definition of virtual digital assets.

NFTs have been included in the scope of virtual digital assets by direct reference.

Additionally, the government has the authority to define which types of digital assets are omitted or included in the definition of “virtual digital assets”.

The suggested framework for taxing gains from virtual digital assets is different from that proposed for profits from other types of capital assets. When calculating the tax incidence, expenses related to the acquisition, retention or sale of virtual digital assets, for example, are not deducted from the gains resulting from their disposal. In addition, any loss incurred as a result of the disposal of such assets cannot be accounted for as a capital loss which may be offset by any capital gains or any other type of income (such as salary, commercial activity or business, or from real estate, other capital gains or any other form of income). Therefore, the benefit of capital loss carry-forward and adjustment over the next eight years, which is available for other types of fixed assets, will not be available for virtual digital assets.

Indian government’s stance on cryptocurrencies

Following the lackluster impact of previous warnings, the RBI adopted a new strategy in April 2018, issuing a circular prohibiting banks and other financial institutions from supporting cryptocurrency trading on national and international exchanges. Indian bitcoin exchanges all but ceased operations following these guidelines.

The Internet and Mobile Association of India challenged this in the Indian Supreme Court in May 2018, saying the circular amounted to a denial of the fundamental freedom of cryptocurrency dealers to engage in any trade or profession, and thus violated the 19(1)(g). ) of the Indian Constitution. The Supreme Court quashed the RBI circular in March 2020, stating that the RBI was not authorized to impose undue limitations on Indian cryptocurrency exchanges in the absence of any legislative prohibition on buying or selling crypto -currencies.

The Cryptocurrencies and Official Digital Currency Regulation Bill, 2019 was introduced in December 2019 with the aim of making the possession, sale or trade of cryptocurrency illegal and punishable up to ten years in prison, a fine or both. Other applications of the underlying distributed ledger technology for experiments, research, or education have also been differentiated and approved under the bill. It also enabled RBI to launch a government-backed digital currency.

The Reserve Bank of India (RBI) has expressed concerns over the legalization of cryptocurrency transactions, citing their potential to destabilize the Indian economy and circumvent government attempts to monitor and restrict the movement of money by criminals. illegitimate means and for nefarious ends.

In light of this, the RBI recommends taking a strong stance and banning and criminalizing all decentralized cryptocurrency transactions. This contrasts sharply with the central government’s intention to grant legal status to virtual digital assets. As a result, the future of virtual digital assets is unknown due to varying perspectives on their legality, as well as changing court opinions.

Central Bank of India Digital Currency

As the Indian government continues to reject cryptocurrencies as legal tender, the finance bill recognizes the potential applications of blockchain technology and announces the Central Bank of India’s own (CBDC)-controlled currency, which will serve as an equivalent numeric of indian rupee. Because the RBI would be the regulator of such a digital currency, it would be different from other cryptocurrencies, which are now decentralized.

In the digital economy, where is India on intellectual property rights?

Several recent bilateral and regional free trade agreements (FTAs) appear to export intellectual property protection requirements that go far beyond the Agreement on Trade-Related Intellectual Property Rights (TRIPS). The Trans-Pacific Partnership (TPP), Trade in Services Agreement (TISA), Regional Comprehensive Economic Partnership (RCEP) and Transatlantic Trade and Investment Partnership are some of these free trade agreements (TTIP).

The TPP, RCEP, and TISA will all include some kind of intellectual property standard setting that will shift the balance of the TRIPS Agreement in favor of rights holders. It is plausible to assume that the TPP and TISA clauses would lead to the loss of what is considered “sovereign” Internet regulation, a trade-off balanced by lower barriers to entry for Indian digital companies in the global market. It should be noted, however, that most clauses in the TPP are subject to a “ratchet clause”, meaning that barrier reduction is a one-way process. In the area of ​​intellectual property, it should be noted that the RCEP project imposes more severe responsibilities in several cases than the TPP. The fact that TISA imposes greater limits on e-commerce and the free flow of information in certain areas than TPP is less unexpected. Indeed, the TPP can be considered as a kind of lowest common denominator among the FTAs ​​examined, but the TISA, which includes the EU and the United States as parties, obviously responds to the interests of the developed countries with greater scale.

Conclusion

Recent FTAs ​​appear to export intellectual property protection requirements that go well beyond the Agreement on Trade-Related Intellectual Property Rights (TRIPS). The Trans-Pacific Partnership (TPP), the Trade in Services Agreement (TISA) and the Regional Comprehensive Economic Partnership (RCEP) are among these free trade agreements (TTIP). It is plausible to assume that the TPP and TISA would lead to the loss of what is considered “sovereign” Internet regulation, a trade-off balanced by lower barriers to entry for digital companies in the global marketplace.

Government of India’s Position on Intellectual Property Rights Protection for Virtual Digital Assets

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