New Delhi: The debate over cryptocurrencies and other Virtual Digital Assets (VDAs) continues to intensify worldwide, and India remains among the countries that have not granted them official approval. After the Reserve Bank of India (RBI), the Income Tax Department has now also raised strong concerns, highlighting the serious risks associated with cryptocurrencies.
According to a report by The Times of India (TOI), senior Income Tax officials recently made a presentation before the Parliamentary Standing Committee on Finance, where they cautioned against allowing cryptocurrencies in India. The officials pointed out that crypto transactions enable instant transfer of money without the involvement of banks or government intermediaries, making monitoring extremely difficult.
The department explained that crypto transactions often involve anonymous identities, have no geographical boundaries, and can be carried out across borders with ease. Because of these features, tracking the flow of funds and identifying the actual beneficiaries becomes a major challenge for tax authorities.
Officials further noted that the presence of foreign crypto exchanges, private digital wallets, and decentralized platforms makes it even harder to determine how much income should fall under the tax net. In many cases, identifying the real owner of digital assets is difficult, leading to a lack of transparency in ownership and transactions.
The Income Tax Department also highlighted legal and jurisdictional hurdles in foreign crypto transactions. Since such transactions can involve multiple countries, investigating money trails and recovering pending taxes becomes almost impossible.
While efforts have been made in recent months to improve information sharing between countries, tax officials admitted that linking transaction chains and arriving at accurate tax assessments remains a complex task.
Despite strong lobbying and global pressure, India continues to take a cautious approach toward cryptocurrencies. Investigative and enforcement agencies have also expressed concerns that crypto assets could be misused for money laundering, terror financing, and other illegal activities.
With both the RBI and the Income Tax Department firmly opposing cryptocurrencies, it is clear that India is unlikely to soften its stance on digital currencies anytime soon.