New Delhi, Dec 22 (UNI) The Parliament Standing Committee on Finance has, on January 8, invited representatives of the Financial Intelligence Unit – India (FIU-IND) and the Central Board of Direct Taxes (CBDT), both under the Ministry of Finance (Department of Revenue), for oral evidence on the subject “A Study on Virtual Digital Assets (VDAs) and Way Forward,” as listed on the Parliament panel’s website.
This study focuses on Virtual Digital Assets-such as crypto currencies (Bitcoin, Ethereum), Non-Fungible Tokens (NFTs), tokenized assets, and gaming tokens-which constitute a rapidly expanding sector in India’s digital economy. Despite significant investor interest and economic potential, the regulatory framework for VDAs remains incomplete. Currently, India imposes a 30 percent tax on income from VDAs and a 1 percent Tax Deducted at Source (TDS) on transactions, but lacks comprehensive legal governance.
The Parliamentary panel aims to evaluate the current VDA landscape, identify regulatory and security gaps, and propose a balanced governance approach that supports innovation, ensures consumer protection, and maintains financial stability.
Key points include: Economic Significance: VDAs have attracted billions in investments and offer opportunities for job creation and digital leadership.
Regulatory Status: Existing laws under the Income Tax Act and the Prevention of Money Laundering Act (PMLA) cover some aspects but do not provide a full legal framework for VDA activities and platforms.
Taxation Structure: Gains from VDAs are taxed at 30 pc, with 1 pc TDS on transactions, but losses are not deductible, limiting incentives for growth.
Challenges: Regulatory gaps drive users to offshore platforms; cyber security risks, including high-profile hacks; money laundering concerns; and conflicts between decentralized assets and India’s capital control policies.
The Committee’s recommendations stress moving beyond a tax-centric approach to a comprehensive governance model. These include establishing a full legal framework for VDA issuance, trading, and platforms; instituting robust consumer protection mechanisms; aligning India’s regulations with global standards such as those of the Financial Action Task Force (FATF) for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT); promoting interdisciplinary collaboration among technology, legal, and financial experts; and balancing innovation with financial stability and risk mitigation.
The study, in a nutshell, underscores the need for India to adopt a well-rounded policy that harnesses the benefits of digital assets while mitigating risks, evolving from a primarily tax-based approach to a full governance model. This will position India as a responsible and progressive participant in the global digital economy. UNI SKA AAB
Parliament panel on Finance to hear evidence on virtual digital assets on Jan 8
