The Direct tax collected by way of tax deducted at source under section 194S of the Income-tax Act, 1961, on payments made upon transfer of Virtual digital Assets (VDA), aggregates to Rs. 157.9 crore upto 20/03/2023 for FY 2022-23. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Rajya Sabha today.

The Minister stated that Crypto assets are currently unregulated in the country, however, transactions in cryptocurrencies are subjected to provisions of various laws like the Prevention of Money Laundering Act, 2002 and Income-Tax Act, 1961.

The Minister further stated that the Financial Stability Board states in its Consultative Document titled “Regulation, Supervision and Oversight of Crypto-Asset Activities and Markets,” dated October 11, 2022 that investment and activity in the crypto asset market is largely self-contained and is mostly for speculative purposes with limited connections to the real economy.

Tax Deduction at Source on Virtual Digital Assets confirms withholding collections and applies alongside anti money laundering and income tax rules. Direct tax collection by way of Tax Deduction at Source on transfers of Virtual Digital Assets aggregated to the reported sum for the fiscal year to the stated date, applying a withholding mechanism on payments from VDA transfers. Crypto assets remain broadly unregulated as a sector, but transactions are subject to the Income Tax Act and the Prevention of Money Laundering Act; international commentary describes crypto markets as largely speculative with limited connections to the real economy.