DirectionFreeNews | India's Parliamentary Finance Committee Pushes for Clear Rules on Crypto Assets

Key Points

Parliamentary finance committee recommends a regulatory framework for virtual digital assets.
India currently taxes crypto but lacks a comprehensive law, creating uncertainty.
The recommendation follows consultations and signals a shift towards formal regulation.
A dedicated bill could follow, but the government may wait for global coordination.

Background History

India's relationship with cryptocurrencies has been tumultuous. In 2018, the Reserve Bank of India (RBI) effectively banned banks from dealing with crypto firms, a move overturned by the Supreme Court in 2020. Since then, the government imposed a 30% tax on crypto gains and a 1% TDS from July 2022, but has not introduced a regulatory law. The Parliamentary Standing Committee on Finance has previously discussed crypto regulation and this report formalizes its stance.

India's Parliamentary Standing Committee on Finance has recommended the creation of a comprehensive regulatory framework for virtual digital assets (VDAs), including cryptocurrencies. The committee's report, submitted to Parliament, signals a growing consensus among lawmakers that ad-hoc tax measures are insufficient without a clear legal structure. Currently, India taxes crypto income at 30% and imposes a 1% tax deducted at source on transactions, but has no dedicated law defining or overseeing these assets. The committee's call aims to fill this gap, addressing concerns around investor protection, anti-money laundering, and financial stability. The recommendation, which follows months of consultations with industry stakeholders and regulators, could pave the way for the government to introduce a dedicated bill. However, the timeline remains uncertain, as the government has previously indicated it would wait for global consensus before finalizing its approach. The move is seen as a step towards legitimizing the crypto sector in India, which has seen repeated regulatory flip-flops since the Supreme Court struck down a central bank ban on crypto trading in 2020.