Nirmala Sitharaman advocates for worldwide understanding in crypto regulation
Implementing regulation solely within one country without a global consensus on a borderless technology won't be effective
FM Sitharaman highlighted the ongoing discussions within the finance ministry and among various regulators since 2020 Image: Hardik Chhabra/ The India Today Group via Getty Images
In a recent interview with businessline, India’s Finance Minister Nirmala Sitharaman shared her perspectives on the future of cryptocurrency regulation in India. She emphasised the need for a global consensus and collaboration to manage this borderless technology effectively.
Recognising the growing importance of crypto assets, the Finance Act 2022 introduced tax regulations for these assets in India. Under the Income Tax Act of 1961, they are classified as "virtual digital assets" (VDAs). According to Section 115BBH, income from the transfer of VDAs is taxed at a flat rate of 30 percent. Taxable events include converting digital assets to fiat currency, trading between different types of VDAs, and using them to purchase goods and services.
Starting July 1, 2022, a 1 percent Tax Deducted at Source (TDS) is also applied to Virtual Digital Assets (VDAs) transfers. This TDS applies to transactions exceeding Rs10,000 and Rs50,000 for specified persons.
Crypto exchanges handle TDS deductions on sell transactions, while buyers are responsible for peer-to-peer deals. Adhering to TDS obligations ensures compliance and avoids potential financial or legal issues.
FM Sitharaman highlighted the ongoing discussions within the finance ministry and among various regulators since 2020, even before India assumed the G20 Presidency. The Reserve Bank of India (RBI) has consistently expressed concerns over the stability of cryptocurrencies, aligning with the government's cautious stance. The Securities and Exchange Board of India (SEBI) has also contributed to the discourse, suggesting that multiple regulators should oversee the sector.
