Parliamentary panel discussed crypto taxation, compliance and VDA regulations amid money laundering concerns.
Government termed VDAs a “high-risk” sector, while Binance, WazirX and ZebPay sought regulatory clarity
India is still evaluating global crypto regulation models despite imposing 30% tax and 1% TDS on crypto transactions since 2022.
India’s crypto ecosystem has once again come under regulatory focus, with the parliamentary standing committee on finance discussing taxation, compliance and the future framework for the sector amid concerns around money laundering, cyber fraud, and offshore capital flows yesterday.
The meeting was attended by senior government officials, including revenue secretary, corporate affairs secretary, and representatives from the CBDT, who briefed the committee, headed by BJP MP Bhartruhari Mahtab, on the rising risks, enforcement actions and tax compliance gaps in the crypto ecosystem.
During the meeting, the government officials told the panel that the virtual digital assets (VDA) ecosystem has been classified as a ‘high-risk’ sector amid concerns around money laundering, trafficking, radicalisation and suspicious crypto transactions, ET reported.
Separately, the panel also met crypto exchanges, including representatives of Binance, WazirX and ZebPay, to discuss the future regulatory framework for the VDA industry and taxation-related issues.
As per a Moneycontrol report, the exchanges made presentations before the committee, seeking regulatory clarity and rationalisation of crypto taxes while raising concerns over capital outflows and the lack of a level playing field with global players operating in India.
During the meeting, Mahtab noted that countries across the world have adopted different approaches towards regulating cryptocurrencies. While the US, the UK and the European Union have introduced regulatory frameworks for VDAs, countries such as China have imposed outright bans, PTI reported.
He added that countries such as Japan and Brazil do not have dedicated regulatory frameworks but are attempting to govern VDAs through existing laws. According to Mahtab, India is currently studying all three approaches before deciding its own course of action.
“But we find thousands of crores being invested in virtual digital assets, which is actually very alarming, and it is all going out of the country,” PTI quoted Mahtab as saying.
The BJP MP added that the panel held discussions with stakeholders and registered entities operating in India, while also consulting officials from the revenue department, income tax department and ministry of corporate affairs because of the taxation implications involved.
Mahtab also pointed out that several VDA-related organisations are based outside India, particularly in Singapore, and stressed the need to ensure that income generated through such investments is taxed within the country.
“So on that aspect, it is necessary that whatever is being invested there and money is being accrued, it should be taxed within our country, and the income tax law also has that provision,” he added.
The development comes amid India’s unclear stance on cryptocurrencies. Despite bringing VDAs under the tax net in 2022, the country does not have a standalone law governing cryptocurrencies.
In Budget 2022-23, the government introduced a 30% tax on gains from crypto transactions, along with applicable cess and surcharges.
It also imposed a 1% TDS on VDA transactions above ₹10,000 annually, while the threshold for certain individuals and HUFs was fixed at ₹50,000. The 30% tax came into effect from April 1, 2022, while the 1% TDS provisions became applicable from July 1, 2022.
However, even as taxation norms were introduced, policymakers continued to maintain a cautious stance on the sector due to concerns around money laundering, terror financing, cyber fraud and offshore capital flows.
In 2024, MoS for finance Pankaj Chaudhary informed the Lok Sabha that the government did not have a fixed timeline for introducing a comprehensive VDA framework, stating that cryptocurrencies are borderless in nature and would require international cooperation for effective regulation.
The sector also came under scrutiny last year after the ED seized nearly ₹90 Cr worth of crypto assets linked to Binance, ZebPay and WazirX as part of a money laundering probe tied to online betting and gaming applications.
Notably, the parliamentary panel earlier met exchanges such as CoinDCX, Coinbase and CoinSwitch in December 2025. Soon after, FIU-IND updated its compliance guidelines for crypto entities in January 2026, tightening AML and KYC norms for exchanges and other VDA service providers.
The revised rules mandate stricter user verification measures, transaction monitoring, suspicious transaction reporting, and more. Offshore exchanges serving Indian users have also been brought under mandatory FIU-IND registration requirements.
The PTI report added that the parliamentary committee plans to continue discussions on the matter to better understand the views of different stakeholders.
Mahtab further noted that the RBI continues to oppose permitting or regulating VDAs in India. Some members of the panel also questioned why the government continues to levy a 30% tax on crypto transactions despite the absence of a dedicated policy or regulatory framework for cryptocurrencies.
The parliamentary panel is expected to submit recommendations on the future course of crypto regulations once its deliberations are completed.
Source: Inc42 - Startups
