UNITEDWORLD SCHOOL OF LAW, KARNAVATI UNIVERSITY,

GANDHINAGAR, GUJARAT

Session: 2018-23
COMPARATIVE ANALYSIS BETWEEN
INDIA AND SWITZERLAND

SUBMITTED TO:

Ms. Priyanka Taktawala

(Faculty for Blockchain and Cryptocurrency Laws and Regulations)

SUBMITTED BY: Bhavika Lohiya & Prakhya Shah

Enrollment No: - 20180401012 & 20180401060

Semester IX

B.B.A. LL.B. (Hons.)

 TABLE OF CONTENTS

GOVERNMENT’S POSITION 4
Switzerland's government's position on cryptocurrencies 4
Indian Government's position on Cryptocurrencies 4
LEGAL STATUS 5
Legal status of cryptocurrency Switzerland 5
Legal status of cryptocurrency in India 5
LEGAL TENDER 6
Are Cryptocurrencies Legal Tender in Switzerland? 6
Are Cryptocurrencies Legal Tender in India? 6
TAX APPLICABILITY 6
Taxation on cryptocurrency in switzerland 6
Taxation on cryptocurrency in India 6
CONCLUSION 7
 GOVERNMENT’S POSITION

Switzerland's government's position on cryptocurrencies

The general stance of the Swiss government toward blockchain technology, and specifically
toward the tokenization of assets, is quite favorable.

Both the Swiss federal government as well as the Swiss Financial Market Supervisory Authority
(“FINMA”) recognise the potential that blockchain and distributed ledger technology (“DLT”)
offer to the financial services industry as well as various other areas of the economy. Switzerland
sees a chance to lead the world in this area, and its officials and authorities are generally
receptive to new ideas.

Indian Government's position on Cryptocurrencies

The Reserve Bank of India (RBI) has advised the government to create legislation for
cryptocurrencies, according to Finance Minister Nirmala Sitharaman. The government's position
on digital assets has evolved significantly over the past several years, from an outright
prohibition on cryptocurrencies in 2016 to an impending Bill for regulation.

During the recent session of Parliament, the government announced its desire to introduce a bill
on cryptocurrencies with the goal of "creating a facilitative framework for the development of
the official digital currency to be issued by the Reserve Bank of India.

The Indian government is approaching cryptocurrency regulation cautiously but firmly. The
Reserve Bank of India (RBI) has warned the public about the dangers of investing in virtual
currencies and asked them to proceed with care. The administration is aware of the potential
advantages cryptocurrency may have for the national economy. India does not yet have any laws,
rules, or regulations governing cryptocurrencies, but it is looking towards creating such laws.
 LEGAL STATUS

Legal status of cryptocurrency Switzerland

The Swiss Parliament enacted the Distributed Ledger Technology Law (the "DLT -Law") on
September 25, 2020. The so-called "DLT-Securities" are a novel concept under the Swiss Code
of Obligations that permit the tokenization of rights, claims, and financial instruments. The DLT -
Law is an "umbrella law" that introduces this idea ("Introduction of DLT -Securities"). The DLT-
Law also makes some clarifications regarding how cryptocurrencies are handled in Swiss
bankruptcy procedures and the introduction of a new licensing category as a DLT -Trading
Venue under the Financial Market Infrastructure Act ("FMIA").

On February 1st, 2021, the DLT-modifications Law's to the Swiss Code of Obligations and the
Federal Act on Intermediated Securities, which permit the development of ledger-based DLT-
Securities, went into effect. The terms virtual money and cryptocurrency are not defined by
Swiss legislation. The term "crypto-based assets'' is defined as assets that were issued with the
primary intention to substantially serve as a payment instrument for the acquisition of goods or
services, or (ii) an instrument for money or value transfers in the revised Federal Ordinance on
Banks and Savings Institutions ("FBO"), which entered into force on August 1, 2021 under the
DLT-Law.

Legal status of cryptocurrency in India

Cryptocurrencies are neither illegal nor regulated in India. Cryptocurrencies may be held,
invested in, and used for transactions by both individuals and entities as long as they abide by all
applicable laws. Additionally, no explicit rules have been passed in India to control or forbid the
trade in VCs or cryptocurrencies.

The Indian government took a step closer to removing uncertainties about the legal status of
crypto transactions as it revealed plans to tax the income from the transfer of virtual assets at
30%, as announced by Finance Minister Nirmala Sitharaman in her Budget 2022 speech.

India is working on legislation to regulate cryptocurrencies, but no draft has yet been released
publicly.
 LEGAL TENDER

Are Cryptocurrencies Legal Tender in Switzerland?

The Swiss National Bank (“SNB”), Switzerland’s central bank, does, however, recognise the
potential uses of digital tokens and will continue to closely follow the respective market and
technical developments.13 There is currently no form of “state-backed” cryptocurrency available
in Switzerland. In particular, the SNB has not issued any cryptocurrencies.

Are Cryptocurrencies Legal Tender in India?

An Indian government official has stated that cryptocurrency will never be a legal tender. Legal
currency is something that is legally recognized as payment for debts. India won't issue any
cryptocurrency as legal tender. Only the Reserve Bank's "Digital Rupee" will function as legal
money in India. The currency will be of the RBI, but its form will be digital. The RBI's digital
rupee will be accepted as legal money. The digital rupee can be used to buy non-digital assets.

TAX APPLICABILITY

Taxation on cryptocurrency in Switzerland

In general, capital gains on personal property, including cryptocurrency, are not subject to
income tax. Cryptocurrency capital gains, however, are taxable if they are retained as part of a
person's business assets.

Capital taxes are imposed annually on legal companies. Legal businesses are therefore required
to include cryptocurrency in their tax assessment at the cost of acquisition or, if this value is
lower, converted at the year-end exchange rate offered by the FTA. As a result, FTA-provided
cryptocurrency with no market value must be recorded at acquisition costs.

Taxation on cryptocurrency in India

The government intends to tax gains made on "Virtual Digital Assets" at a rate of 30% of the net
gain so made plus the cess and a surcharge for a threshold amount, according to the
announcement made by the honourable Union Finance Minister Smt. Nirmala Sitharaman while
reading out the proposals of the Union Budget 2022–23 in the Parliament. She additionally
suggested that inter-person transactions involving these assets be subject to TDS (Tax Deducted
at Source) at a rate of 1% over the threshold limit that the government would announce.

Income from transfer of virtual digital assets such as crypto, NFTs will be taxed at 30%.

2. No deduction, except the cost of acquisition, will be allowed while reporting income from
transfer of digital assets.

3. Loss from digital assets cannot be set-off against any other income.

4. Giving away digital assets will incur tax liability for the recipient. It is not possible to offset
losses from one virtual digital currency against gains from another.

CONCLUSION

In the report we found out that Switzerland has a favorable approach towards crypto and
blockchain technology. The Swiss Government as well as the Financial Market in Switzerland
have expressed that this distributed ledger technology is the growing market. Switzerland has
enacted the Distributed Ledger Technology Law (the "DLT-Law") on September 25, 2020. In
general, capital gains on personal property, including cryptocurrency, are not subject to income
tax. Cryptocurrency capital gains, however, are taxable if they are retained as part of a person's
business assets.

However, in India Cryptocurrencies are neither regulated nor prohibited. The Indian Government
in the first instance banned the usage of cryptocurrency. After seeing the crypto leading world
India introduced Crypto Bill which is yet to be passed. RBI is continuously issuing warnings
against the risks associated with digital currencies and has urged people to exercise caution
before investing in them. The Indian government took a step closer to removing uncertainties
about the legal status of crypto transactions as it revealed plans to tax the income from the
transfer of virtual assets at 30%, as announced by Finance Minister Nirmala Sitharaman in her
Budget 2022 speech.