The Government of India has raked up ₹158 crores or $19 million as TDS from its crypto investors, as of 20th March 2023.
According to information provided to the Parliament [legislative body], up till March 20, 2023, the direct tax revenue obtained through tax deducted at source [TDS] on payments made upon transfer of virtual digital assets [VDA] was Rs. 157.9 crores.
In a written statement, addressed to the Rajya Sabha [India’s upper house], Pankaj Chaudhary, Minister of State for Finance wrote,
“Crypto assets are currently unregulated in the country. However, transactions in cryptocurrencies are subjected to provisions of various laws like the Prevention of Money Laundering Act, 2002, and Income Tax Act, 1961.”
He also said that the Financial Stability Board states in its consultative document titled “Regulation, Supervision, and Oversight of Crypto-Asset Activities and Markets” that investment and activity in the crypto-asset market are largely self-contained and is mostly for speculative purposes with limited connections to the real economy.
Last year, Indian authorities imposed a 30% capital gains tax on cryptocurrency assets as well as a 1% tax deducted at source [TDS] on all cryptocurrency transaction proceeds, all of which took effect on April 1, 2022.
The nation’s crypto investors were left frustrated by these strict regulations as trading volumes took a drop within 10 days and subsequently fell by 90% over the following three months.
A number of crypto entities left India, moving their operations and trading to countries that are more accepting of the asset class, such as Dubai or El Salvador.
While the nation’s apex bank, the Reserve Bank Of India [RBI], has called for an outright ban on crypto assets. The Indian government, on the other hand, is yet to take a firm stance on the same.
Indian Crypto Platforms Required To Do This
According to sources, the government has reportedly been developing a crypto policy since 2019, and even released a draft crypto bill, however, the legislature never took it up.
In the most recent announcement made by the Indian Finance Minister Nirmala Sitharaman, the administration intends to debate crypto laws with the G20 members to determine the best way to go about them.
Further, on March 7, the finance ministry issued a notification stating that local crypto exchanges and entities dealing with virtual digital assets [VDA] will be required to conduct know-your-client due diligence on their users.
