Virtual Digital Assets (VDA) Ecosystem: High-Risk Classification
The VDA ecosystem is identified as "high risk" due to various illicit activities, including drug and human trafficking, radicalization through social media, and high-value crypto transactions in sensitive locations.
Key Concerns and Actions
- Intelligence Reports: Highlight links to money laundering, narcotics trafficking, human trafficking, smuggling, and circulation of child sexual abuse material.
- Financial Surveillance: Increased operational and tactical analysis reports from FIU-IND, signaling a strong enforcement push.
- Non-Compliance: 6.45 lakh individuals faced TDS on crypto transactions in FY23, but only 1.39 lakh disclosed income in tax returns.
- FIU-IND Initiatives:
- Initiated 52 compliance proceedings under PMLA.
- Issued four compliance orders and imposed penalties in three cases.
- Collected a cumulative fine of ₹29 crore from KuCoin, Binance, Coinbase, and Bybit.
Regulatory and Taxation Measures
- URL Blocking: Authorities blocked 63 URLs and disabled 85 platforms for non-compliance.
- Tax Collection:
- Assessment Year 2023-24: ₹269 crore in tax and ₹220.82 crore as TDS.
- Assessment Year 2024-25: ₹437 crore in tax and ₹364.62 crore as TDS.
- New Rules: Crypto transactions must be disclosed under Rules 242 and 243 of the Income-Tax Rules 2026, effective January 1.
- Proposed Measures: Linking crypto ownership with PAN and introducing uniform valuation norms.
After the meeting, the Parliamentary Standing Committee on Finance, headed by BJP MP Bhartruhari Mahtab, emphasized the need for tighter regulation and taxation, given the "alarming" scale of investments in VDAs.
