Parliamentary Panel Calls Crypto Investments Alarming, Signals Support For Existing Tax Rules

Cryptocurrency and other virtual digital asset investments have seen a sudden growth in India. The panel on Wednesday described the trend as alarming and supported the continuation of taxation on such transactions in the country. The Standing Committee on Finance, which examined the issue in detail during its seventh sitting, also discussed the need for a clearer regulatory framework for the sector.

The Parliamentary Standing Committee on Finance, chaired by BJP MP Bhartruhari Mahtab, held detailed deliberations on virtual digital assets, focusing on taxation, regulation and global policy approaches. It is reported that the committee heard views from stakeholders operating in India, registered entities, as well as organisations based abroad, including in Singapore.

Officials from the Revenue Department, Income Tax Department and Ministry of Corporate Affairs also participated in the discussions to present their perspectives on taxation and regulatory issues related to the sector.

Mahtab told PTI, that the committee noted that significant investments are flowing into cryptocurrencies and emphasised that income generated from such assets should be taxed within India under existing income tax provisions.

He added that global approaches to virtual digital assets vary widely, with countries such as the United States, United Kingdom and European Union adopting regulatory frameworks, while China has imposed a ban. Other countries, including Japan and Brazil, follow a containment-based approach without a comprehensive regulatory structure.

The committee noted that India currently does not have a dedicated law governing virtual digital assets and is studying international models to determine an appropriate approach.

Mahtab also pointed out that the Reserve Bank of India remains opposed to allowing regulated operations of virtual digital assets in the country.

According to sources, some members of the panel raised concerns over the existing taxation structure, questioning how a 30 per cent tax is being levied on crypto gains in the absence of a formal regulatory framework.

Currently, virtual digital assets in India operate in a legal grey area but are subject to taxation. The government imposed a 30 per cent tax on income from virtual assets in the 2022–23 Budget, along with a 1 per cent TDS on higher-value transactions.

The committee is likely to continue its discussions and submit recommendations on the future regulatory and taxation framework for virtual digital assets after further consultations.