India's Crypto Oversight: Legalities and Taxation in Focus

India does not regulate crypto platforms, making their legality irrelevant, says Minister of State for Finance Pankaj Chaudhary. However, Virtual Asset Service Providers must register under the Prevention of Money Laundering Act to comply with anti-money laundering laws. The nation has also introduced a tax on Virtual Digital Assets.

In a recent statement to Parliament, Minister of State for Finance Pankaj Chaudhary clarified that crypto or virtual assets remain unregulated in India, thus rendering questions about the legality of specific platforms moot. This was confirmed during a session focused on financial regulations.

The minister emphasized the role of the Financial Intelligence Unit (FIU-IND), which registers Virtual Asset Service Providers under the Prevention of Money Laundering Act to ensure compliance with anti-money laundering and counter-terrorism financing laws. Failure to register leads to inclusion in a dynamic list of non-compliant platforms.

To address revenue from digital currencies, the Finance Act, 2022 introduced a 1% Tax Deducted at Source on virtual digital asset transactions, applicable to both domestic and foreign entities. The Reserve Bank of India has also issued advisories outlining the risks of engaging with cryptocurrencies. The government actively uses data analytics and forensics to monitor and investigate potential tax evasion in digital asset transactions, bolstering compliance through regular training initiatives.