Currency is issued by the central bank & has an intrinsic value; Crypto is being taxed as the transaction is happening: Nirmala Sitharaman, Union Minister of Finance

Union Minister of Finance and Corporate Affairs Nirmala Sitharaman says Crypto can be an asset currency is something that is backed by the government, has an intrinsic value and is issued by the central bank of the country. FM Sitharaman during an exclusive interview with Sudhir Chaudhary, Editor in Chief, Zee News, WION, Zee Business and Swati Khandelwal, Executive Editor, Zee Business, spoke about different aspects of the budget. Edited Excerpts: 

See Zee Business Live TV Streaming Below:

Sudhir Chaudhary: Since independence, none of the finance ministers has seen such a challenging period in which he/she has to prepare a budget in such a situation. Did you feel that you needed a special kind of training or did you get it on the job because you have presented two budgets in these difficult times, one in 2020 and the next one? How did you feel when you presented your first budget in the post-COVID era and did you feel that it is going to be a very difficult challenge for you and do not understand how to do it, at the same time, it is a thankless job as everyone will never be happy with you? 

Ms Nirmala Sitharaman: It is true but I would like to remind you about two things in this context. 

(i) The Prime Minister continuously held stakeholders’ consultation via video conferencing. It was not possible to sit face-to-face, so, through video conferencing, he had talks with people from every segment to know what was going on in their minds and what are their expectations. I also had talked. After this, we - the entire finance team - sat with the Prime Minister to see what was there and how to handle it for every section. There were just two budgets if seen technically, but after the lockdown, at least five such announcements were made, which needed preparations similar to the budget and had budgets like financial implications, division for these different segments and many more. We have presented more than two budgets in just one year, so, the situation was quite challenging. And in this, as I said, the input of people and every section were also needed in it. Prime Minister also sat with us - he didn't let us by saying that it is the responsibility of the Finance Ministry, they will come up with something, it happened - and things were done in consultation with him. At the same time, he also checked on whether the outcome of his consultations from every section was included or not, he also filtered on those among others. It was quite rigorous, detailed, and such support amid a kind of leadership that is behind you, which is supporting you in every step. As you referred about learning on the job, definitely, it happens and such learning never gives you a feeling that you are tired, in fact, it motivates you as we have such support and we are able to understand the feeling of people which give a sense that more should be done. So, that is why we could survive and that is why at least someone like me was able to work more and commit myself to work more. 

Sudhir Chaudhary: You have proposed a 30% tax on the digital assets in this budget. This has created confusion that have you legalised the cryptocurrency in India because it will be taxed? So, make it clear to our viewers, who have also invested in this cryptocurrency, what is the status of cryptocurrency at present and whether it will also attract GST separately after this 30%? Is Bitcoin going to be a lottery, horse riding or gambling?

Ms Nirmala Sitharaman: If you need clarity on it, it will be provided, we are not hesitating from it. But we should think carefully about words like cryptocurrency, digital currency and use them. Currency means something that has the backing of the government and should have some intrinsic value. It gets an intrinsic value when it is issued by the government. If you and I issue a currency sitting at home, then that currency is not a currency. The work of providing intrinsic value is done by the backing of the government and the authority of the government. It is issued by the central bank of the country, whether it is India or anywhere else, and it is considered as a currency in the traditional sense. And, when a digital currency is issued, in the modern sense, it is a digital currency. But something that is issued via mining, through mining and by using the blockchain technology, then to some extent it can be an asset but not a currency. Let us understand this difference in advance. The asset that is being created, whatever the quality of the asset may be, whatever type of asset it maybe, created by somebody, completely democratised, who is creating, who is passing on to whom, it is a distributed leisure in which there is an entry in few and exits in others. If you are earning some profit via a transaction it has been taxed. First of all, it is not a currency and if you are earning profits in it through transactions maybe you are selling it or buying it, then taxation has to be levied. Then the participants of this transaction, maybe you didn't earn a profit, but it is moving from one to another, which means a transaction is happening, TDS (Tax deducted at source) will apply on it. We should understand that it is about the board. TDS means it is not an additional tax, you just have to reconsider it in the other taxes you are paying. You can adjust it with the payment of other taxes that you are paying. TDS is not an additional tax, so, doing anything with it will be above board. Time and again, it has been asked to me that if you are not regulating it then how are taxing it. I am taxing it just because the transaction is happening. I can't ignore it. Above all, what should be done on it, what is your position on it, should it be regulated or banned, what should be done. It requires a consultation. We are not deciding on it simply by sitting in a room, we are talking with you, those who are interested to talk about it with us can have a talk. We will decide on it by taking everyone's opinion. So, there is no reason to be confused, but technically, whether to put 30% on it, whether it will come under 30% or not, it is just a transaction, so a TDS will apply to it. We are always ready to give a clarification on all these questions. 

Swati Khandelwal: You have said that this budget will lay the foundation for the next 25 years. Can you explain to us how? Also, you have talked about the CapEx (Capital Expenditure) of Rs 7.50 lakh crore, which is a very big amount. So, where will the income come from, you have prepared the expenses?

Ms Nirmala Sitharaman: Firstly, at the start of the budget, I said that we are keeping a twin-track in front of you. One track is that is continuing from the past that only through public expenditure in infrastructure, we will revive this pandemic affected economy. It started last time when we made a huge allocation compared to the past year and this time, it has been increased further to Rs 7.50 lakh. This public expenditure of such a huge amount that will be used in creating assets like roads, ports, airports, inland waterways, common economic corridors running through several states, will have a lot of multiplier effect. You deal in business matters, so you are well aware that when Re 1 of the capital expenditure is invested its multiplier, in conventional analysis it is said that benefit of up to Rs 2.95 will be made, i.e., you will get a benefit of up to Rs 2.95 by spending Re 1. This means financial activities will start in the economy including jobs. For instance, you will get bridges, which require cement, steel and many more.

If I will not do it via capital expenditure and provide remuneration and I would like to site a simple example for it, which is floating, if I will provide money in your hand, then it will also have a multiplier effect but in this for every Re 1 spent you will get just 0.95 paise, which is less than a Rupee. This is why, I along with my entire team, and the Prime Minister have a belief since the last year that if you spend, then make sure that the multiplier effect is more and you will get out of it. Technically, it is termed as the multiplier effect, but it means, you will get the job, demand will increase and demand will not be limited to cement and steel but it will also include the expenses of the people who work on it, like their clothes, food, as well as travelling expenses among others. So, its multiplier effect is more compared to providing money in someone's hand, whose effect is less.

Swati Khandelwal: What the middle class, the honest taxpayers, have got from this budget as we always have an expectation from the budget? 

Ms Nirmala Sitharaman: Even I am a middle-class person and you are also the same. Everyone talks about it and I do understand it. Normally, the middle class, I am using the term loosely, has some income, you are not the poorest of the poor this is a reason our sufferings are double, and people say this way, to an extent, I agree to it. But we are not as poor as to, we say that I am not without an income, I am getting some, but you are taxing me. I am not a highly net individual, who can pay tax and rest but you are taxing me and what am I getting for this tax. I agree, this is a very right question to ask and I am fully sensitive to it. But my answer to that being this side of the table is what exactly do we mean about the middle class, it is spread across the board. Isn't there a middle class among farmers? Middle-class children are studying abroad. Haven't we opened anything for them to send money through the LRS scheme? Almost, Rs 2.50 crore or something like that has been allowed to transfer to their children. Isn't that for the middle class? You would remember in 2019, there was a huge outcry, and rightly about the middle class has taken a loan, invested in buying an apartment, but couldn’t get the apartment because they all were stuck, they were paying EMI in the banks but paying rents also. Didn’t we come up with a scheme, so that those stuck projects are completed and the middle-class should get the keys to the homes? I went to Mumbai on the success of a project to hand over the keys. These projects are not projects of the Modi Government and weren’t those for the middle-class. We are those, who allocated money for the completion of such stuck projects in tier-II and tier-III cities across the country and getting them completed. Promoters left those projects; it was done for the middle-class. Similarly, the tax concession and interest subvention provided up to Rs 45 lakhs for affordable homes. Isn’t it for the middle-class? At the same time, we are opening a number of medical colleges across the country and increasing seats to study MBBS and nursing. Isn't this for the middle class? How many jobs are available in each AIIMS, especially, when investments are made for it across the country? For whom is it for?

Sudhir Chaudhary: Swati wants to ask about the common man’s sentiment, which says that today’s middle-class is like Shravan Kumar, who is carrying the burden of corporate loans on a shoulder for the super-rich and on the other, he has the burden of Below the Poverty Line and farm loans. The one who is financing all this is a middle-class man because he is an honest man, pays his taxes, does his work properly and puts his savings in the bank. So, he has the burden of both, the super-rich as well as super-poor?

Ms Nirmala Sitharaman: With due respect, I would like to say, yes, they pay the taxes. In every budget speech of mine, I speak at least a line about them as recognition. I really appreciate honest taxpayers, who pay for the country. Despite this pain, they say, it is necessary to pay the taxes to the country as we have to do something for the country. The feeling is present in them and I do recognise it. But it is difficult to ignore the development that is happening in this country at once. Aren’t poor being our brother and sister and for whom all this - toilet, gas, house, water to the house - is for? Should they be kept on the other side and aren’t they the citizens of India? There are poor and rich even in our homes. Even middle-class families also have poor relatives, when we go to our villages to meet our grandmothers don’t, we have even such people in our relationship. This is one subject.

Secondly, what are we doing for the rich? I am not able to understand that it is happening from our taxes. Is this 24*7 supply of electricity due to which the businesses are running well and industries are coming to invest for the riches or are doing it so that we all can get employment due to that business. For whom are we doing so? That is why some parties are using few words politically and we must not enter into their yard and think that way. Certainly, the developmental indicators of the country are improving. Just think, some 6-7 years back from here, suddenly, there was a grid failure due to the electricity supply coming to a complete standstill. Do you remember it? There was complete darkness in one area of the country. The whole country was asking us what is happening? You term yourself as an emerging economy but can’t do even this? Also, due to electricity cuts and its shortfall, even in cities, there were electricity cuts of around 12 hours, six hours and sometimes 1 hour, which was due to an unpredictable supply. Coming out of it, today, we are on the verge of producing almost surplus plus energy. Whose money is this? It is your money. Should it be done or not for all of us, we should also think about it. At the same time, also compare the current tax rates with the tax rates of 1980, 1985, 1990, you were paying upto 45% and there was one time and when I was looking at the data, it was up to 90%, not in the 1980s but even earlier. There was such a tax regime and we have reached these levels from there.

Swati Khandelwal: Amid the spending growth in the tax collection, it is visible that our spread is increasing. So, can it be expected that when the spread will increase, the collections will be better then maybe some concession will be given to the taxpayers? Even people say that if you will reduce the tax then more people will come forward to pay the taxes, ultimately, there will be no effect on your tax collections and the spending will also increase?

Ms. Nirmala Sitharaman: Same is the logic in GST. For the last two years, it has been there in the tax rationalisation discussion and I would like to say thank to the GST Council, that in hurry they never said yes increase the rates so that the collection will increase. They were wise, they were very considerate to say, no, let us see how to do it, meantime, stop the leakages, use the technology and catch who are doing frauds, all these actions will improve the GST Collection. This was the hope of the GST Council, I am saying it proudly that the team of GST Council is doing good work to stop the frauds due to which the collection is improving and there is no need to adjust the rates in a hurry. Let the tax base widen, everyone will get the benefit.