Finance Minister Nirmala Sitharaman on Monday, December 8, said that it will take “significant international collaboration” to efficiently regulate cryptocurrency and other virtual digital assets (VDAs).
Speaking at the Lok Sabha, the minister said that India does not collect data nor regulate the crypto industry that is “inherently borderless” in nature.
“Any regulatory framework for crypto assets can be effective only with significant international collaboration,” Sitharaman said.
The minister’s statement of avoiding complete regulation of crypto assets is in line with the Central Bank’s view that containing the risks of cryptocurrencies through regulation would be difficult.
Although cryptocurrency is not considered legal tender in India, it is allowed to hold, purchase, and sell as Virtual Digital Assets (VDAs) within limits. Gains made from crypto trading are also taxed a flat 30%, along with an additional 4% cess. There’s also a 1% TDS on crypto transactions exceeding ₹10,000 in a year, or ₹50,000 annually for specified individuals.
Sitharaman also informed the house that transactions worth ₹888.82 crore were identified during search and seizure operations as undisclosed income from VDA.
Crypto-related cases were attached under Prevention of Money Laundering Act (PMLA) with proceeds worth ₹4189.89 crore attached or seized by the ED. It had also arrested 29 people, including one declared fugitive economic offender, and filed 22 prosecution complaints.
Under the Non-Intrusive Usage of Data to Guide and Enable (NUDGE) campaign by Central Board of Direct Tax, 44,057 communications were sent to taxpayers who invested or traded in VDAs but did not report these in Schedule VDA of their Income Tax Returns (ITRs).
The minister said that the government is strengthening the monitoring and investigation of VDA-related transactions, signally that crypto-transactions are being tracked for criminal activities even though the government has shied away from complete regulation.
