Synopsis
A parliamentary panel has expressed alarm over thousands of crores invested in virtual digital assets. The committee is studying global approaches to regulation. They advocate for continuing taxes on all such digital transactions. This move aims to ensure revenue stays within India. The panel will make recommendations after further deliberations.Listen to this article in summarized format
The Parliamentary Standing Committee on Finance, headed by BJP member Bhartruhari Mahtab, had a detailed discussion on virtual digital assets.
Mahtab said virtual digital assets are dealt with by countries in three different ways -- the US, the United Kingdom and the European Union have regulated virtual digital assets. There is another set of countries that have banned it, like China.
However, he said, India does not have a law relating to that.
"There is a third category, like Japan and Brazil, which do not have a regulatory mechanism but want to contain it through their law. So we are studying all three aspects to determine which is better.
"But we find thousands of crores being invested in virtual digital assets, which is actually very alarming, and it is all going out of the country," he said.
Mehtab said the meeting discussed about virtual digital assets where stakeholders, those who are operating in India and are registered, made presentations.
"Along with that, we also called the Revenue Secretary and the Income Tax Department (officials). And also Corporate Affairs Secretary. Because all three are involved in it, relating to taxation," he said.
There are certain organisations that are stationed outside -- in Singapore, Mahtab said.
The BJP MP said that a lot of people are investing in cryptocurrencies.
"So on that aspect, it is necessary that whatever is being invested there and money is being accrued, it should be taxed within our country, and the Income Tax Law also has that provision," he said.
Mahtab said it is necessary to understand the viewpoints of the stakeholders and the committee will have a further meeting on this subject. "The RBI is opposed to allowing regulation or allowing permission for virtual digital asset being operated in our country," he said.
Sources said some members of the panel questioned how the government is levying a 30 per cent tax when there is no policy on cryptocurrency.
Currently, cryptocurrencies in India are a legal grey area with no specific law governing their legality. Cryptocurrencies are, however, subject to income tax and GST.
The 2022-23 Budget has brought in clarity with regard to the levy of income tax on crypto assets. From April 1, 2022, a 30 per cent IT plus cess and surcharges came into force on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.
The Budget 2022-23 also proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the IT Act.
The provisions related to 1 per cent TDS came into effect from July 1, 2022, while the gains were taxed effective April 1, 2022.
The sources said the panel will make recommendations on the future course of action on cryptocurrency after completion of deliberations.
