Indian Parliament's Finance Committee Holds Meetings with Binance, Wazirx, Zebpay on Cryptocurrency Regulations and Taxation

India's Parliamentary Standing Committee on Finance Meets Crypto Exchanges to Discuss Regulations and Taxation

On May 20, the India's Parliamentary Standing Committee on Finance met representatives from crypto exchanges Binance, WazirX, and Zebpay in Delhi to discuss the scope of regulations, the way ahead for virtual digital assets (VDA) industry, and taxation. The meeting was also attended by other stakeholders, including VDA companies based in Singapore, revenue secretary, corporate affairs secretary, and representatives from the Income Tax Department.

The meeting comes months after the Finance Ministry's Financial Intelligence Unit of India (FIU-IND) released updated guidelines to tighten business operations and practices of VDA companies. The Chairman of Parliament Standing Committee on Finance, Bhartruhari Mahtab, stated that the meeting focused primarily on digital assets and discussed the issue with all three stakeholder groups: those who operate and are registered in India, as well as organizations that are based abroad in Singapore.

This was the seventh such meeting with the crypto industry stakeholders, and many more such discussions are expected. Mahtab emphasized that many people are investing in crypto in the country and need to come under taxation, with provisions already existing under income tax. He also alluded to RBI's role in permitting VDAs to be legal in the country, citing examples from the US, China, Japan, and Brazil.

Read also: Bitcoin Price Sinks 6% Below $66,500 Amid ETF Outflows and Institutional Selling

According to sources privy to the developments, all three exchanges made their presentations before the committee on Wednesday. The domestic exchanges had raised concerns about the need for regulatory clarity, rationalization of taxes, and the huge outflow of investor funds through crypto while the assets remain volatile. The government officials were asking about the crypto environment in general, probing questions on how the exchanges are working towards educating investors, and the state of the sector.

Everybody was focused on consumer protection, with the government officials worried about the huge outflow of investor funds through crypto while the assets remain volatile. This meeting was largely in continuation of the earlier meeting that other domestic exchanges attended last year, with today's meeting more focused on sharing recommendations for a sustainable VDA ecosystem and clarifying any concerns.

In a previous meeting with Coinbase, CoinSwitch, and CoinDCX in December, the regulators discussed concerns around peer-to-peer transactions, issues with international transactions, remittances, and bringing foreign and Indian crypto exchanges under the same policy and legal framework. The exchanges also urged the committee to rethink the high taxation implemented on the sector, asking to reduce tax deducted at source to 0.1 percent.

Read also: Bitcoin's Inflation-Hedging Potential Erodes as Price Falls Below $70,000

At present in India, income from crypto and VDAs is taxed at 30 percent, and 1 percent TDS is deducted on all transactions. The meeting also discussed fraudulent international transactions and fake actors impersonating registered crypto exchanges. The standing committee had deliberated approaches of executing the policy in the right way, gathering resources, and discussing taxation, need for policies, and the updated guidelines needed for the industry.