The Parliamentary Standing Committee on Finance is set to meet with officials from the Reserve Bank of India (RBI) on July 2 in New Delhi to discuss the future regulatory framework for cryptocurrencies. The committee will focus on the oral evidence provided by RBI representatives regarding ‘A Study on Virtual Digital Assets (VDAs) and Way Forward.’ Following this, discussions will also be held with the Institute of Chartered Accountants of India (ICAI) on crypto-related issues and taxation norms.
The Finance Ministry and RBI have been cautious in their approach to digital currencies due to the associated risks of money laundering, terror financing, and potential economic destabilization. RBI Governor Sanjay Malhotra had highlighted the significant risks posed by stablecoins and cryptos, leading to a cautious stance by the authorities.
Finance Minister Nirmala Sitharaman has adopted a pragmatic and careful stance on cryptocurrencies, considering them as taxable assets rather than legal tender. She has clarified that cryptocurrencies are not recognized as legal currencies, emphasizing the necessity for central bank or government-issued currencies.
Cryptocurrencies in India are classified as Virtual Digital Assets (VDAs) and are subject to stringent central taxation regulations, including a flat 30% tax on profits and a 1% tax deducted at source (TDS). However, taxing these trades does not confer legal status to cryptocurrencies, as reiterated by the Finance Minister.
Sitharaman believes that global cooperation is essential for effective regulation to combat issues like money laundering, drug trafficking, and terrorist financing. While the parliamentary standing committee can provide recommendations, these are not binding on the Government.
