India has no immediate plans of deploying detailed regulations over the crypto sector, officials from the Finance Ministry have reportedly informed the parliament during the ongoing monsoon session in New Delhi. The country, that is acclaimed as the largest host of Web3 developers globally, is also maintaining its current tax framework around crypto incomes giving no relief to its crypto community despite multiple requests.
The crypto sector has partially been under the government oversight ever since the Finance Ministry started taxing crypto transactions in 2022. Incomes generated through crypto activities are taxed at 30 percent whereas one percent TDS is cut on each step of a crypto transactions exceeding Rs. 10,000. Meanwhile, in the lack of comprehensive regulations, all crypto firms in India are mandated to register with the Financial Intelligence Unit (FIU-IND) and comply with KYC, anti-money laundering, as well as counter terror financing laws.
India on crypto taxes
India is touted among nations that have levied high taxes on crypto related transactions. Japan, The Netherlands, and Albania have also secured a position in the list alongside India.
In the last few years, India’s crypto industry insiders have tried to pitch for a reduction in taxes citing them as roadblocks to mainstream crypto adoption and the overall expansion of the sector in the world’s most populated nation.
India’s finance ministry, however, is not considering immediate changes to its crypto tax regime, media reports have claimed.
The country also plans to keep crypto ETFs at bay for the coming times in order to keep its investor community protected against the financial risks linked to the volatile crypto assets.
India’s stance on crypto regulations
Pankaj Chaudhary, the minister of state in the ministry of finance has informed the parliament that crypto assets are currently unregulated in the country and that the government is not collecting data on these assets for now. Chaudhary was responding to a list of questions put forth by parliamentarian Putta Mahesh Kumar.
Calling crypto assets “borderless” in nature, Chaudhary said creating regulatory guidelines around digital assets require “international collaboration”.
“Any proposal for bringing model guidelines/rules can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” he noted in his written reply to Kumar.
India has been advocating for global collaboration on international crypto rules since its G20 Presidency in 2022. While India continues to seek a unified international approach, other regions, including the U.S., the U.A.E., and the EU, have moved forward with prioritizing crypto regulation within their own jurisdictions.
The Reserve Bank of India (RBI) has also repeatedly issued risk warnings linked to crypto engagements in the country and maintains a scrutinized approach towards cryptocurrencies, Chaudhary added.
In February this year, RBI Governor Sanjay Malhotra had said that the nation must wait for the Finance Ministry’s discussion paper on crypto assets for a clarification on crypto stance. This paper has been due since July 2024.