Fiat exchanges are temporarily disabled, so I think after imposing taxes they might lift those restrictions and that may be a plus point, but at the moment people are engaging with P2P system, which is working great, so it would be both a positive and negative approach for the users/holders.
Also, I agree with your point that it will induct courage and believe among the newcomers and orthodox mentality people who don't believe this system as of now.

Here is how they will know this:

1) Taking the details of investors from Indian crypto investors.

2) Tracking heavy investments being done through bank transactions.

3) May be  monitoring use of internet for certain specific websites or exchanges.

Legally, it has been our responsibility to pay taxes from any source of income we divulge. Depending on jurisdiction and laws encompassing crypto and income derived from it, we should pay these taxes. However, the much irritating point is, we do not or cannot see that these taxes are really working for us. Anyhow, we got to pay what we owe to pay since we benefited from using it. That's how the law works, that's how the government source their income too. Sometimes, it just seems to much, the rate/amount for which we ought to pay, implicitly making discouraging us from divulging ourselves from this industry.

if this news is indeed true, hopefully it can be replicated by other countries to immediately legalize bitcoin, if that happens, of course, bitcoin will increase its existence and price, because it doesn't clash with legality.

This information is totally wrong because it is impossible to imposed tax on bitcoin holders because it is digital money which is beyond the control of the government.

No this is wrong information. no-one can taxed you for holding bitcoin in this world because it is also a type of money or digital money and no-one can taxed you on money.

I think after the tax they can lift those restrictions and maybe the plus points, which are working well. Also, I agree with your point of view that it will create courage and trust in those. newcomers and orthodox psychologists who do not believe in this system from now on.

They won't and they can't. The shittiest government in the world isn't capable of finding the bitcoin holders or track them. What I hate the most is the fact they're okay with corruption, rapes, corporate thefts but suddenly bitcoins are a huge concern for them. You know, you can just not pay tax for your entire life and if found out, you can bribe the government -- That is how all the rich save taxes in India.

Both yes and no.
1.Bitcoin earned in mining as exempt as of now. There is no law to tax them.
2.Bitcoin purchased for real money for investment purpose is taxed under head capital gain. Long term if held more than 3 yrs otherwise as short term capital gain.
3.Bitcoin if regularly traded will be taxable under head profit and gains from business and profession deeming a specualtion business.
4.Bitcoin received in the normal course of business is taxable under head profits and gains from business and profession.

well, do they really give tax to crypto users? Well, last time I heard that India also tried to ban bitcoin. well, if they make bitcoin users pay taxes, of course this is also an acknowledgment that India legalized crypto in their country.