🇮🇳 I-T Department Flags Crypto Risks, Backs RBI’s Opposition 💰
The Income Tax Department has raised serious concerns over virtual digital assets (VDAs), including cryptocurrencies, aligning with the Reserve Bank of India in opposing their wider entry in India.
In a presentation to the Parliamentary Standing Committee on Finance, tax officials highlighted that the anonymous, borderless and near-instant nature of crypto transactions allows funds to move without regulated financial intermediaries. This makes tracking taxable income and identifying beneficial owners extremely difficult.
Authorities pointed out that offshore exchanges, private wallets and decentralised platforms further complicate enforcement, as transactions often span multiple jurisdictions. These limitations reduce the ability of tax officials to verify income flows or recover pending tax dues, even with recent improvements in international information-sharing.
India remains among a group of countries reluctant to allow cryptocurrencies and stablecoins despite sustained lobbying. The RBI has repeatedly warned that crypto assets lack underlying value, are highly volatile and pose risks related to money laundering and terror financing.
The tax department also noted enforcement challenges such as difficulty in issuing summons, collecting TDS and regulating platforms operating outside India. Several crypto exchanges remain unregistered with the Financial Intelligence Unit, placing them beyond the direct reach of Indian tax authorities.
To mitigate risks, the government has introduced safeguards including mandatory TDS on crypto transactions and registration requirements for entities dealing in VDAs.
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