India’s Schedule for Releasing Crypto Discussion Paper

Despite Indian crypto users receiving no reprieve from the stringent tax regulations in India’s budget for 2024-2025, a crypto “discussion paper” detailing the government’s policy perspective on the sector may be published prior to September this year.

The primary aim of the crypto discussion paper is to solicit feedback from pertinent stakeholders regarding the concepts presented within it.

India’s Crypto Discussion Paper

In a conversation with Moneycontrol, India’s Economic Affairs Secretary Ajay Seth indicated that the discussion paper will encompass recommendations on how to regulate cryptocurrencies in India, which are presently only governed by anti-money laundering (AML) and electronic funds transfer (EFT) legislation.

Other critical areas of focus will include examining whether the regulatory scope should be broadened and determining the appropriate policy stance.

An inter-ministerial group, comprising members from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), is formulating a comprehensive policy on cryptocurrencies. The discussion paper is expected to be finalized before September.

Seth was quoted stating,

“The policy stance is how does one consult relevant stakeholders, so it is to come out in the open and say here is a discussion paper, these are the issues, and then stakeholders will give their views.”

India’s initiative to publish a discussion paper is a response to the endorsement of the International Monetary Fund (IMF) and Financial Stability Board (FSB) guidelines by G20 nations during India’s G20 presidency last year.

The IMF-FSB synthesis document recommended against an adversarial approach, such as an outright prohibition on crypto activities, emphasizing the challenges associated with enforcing such a ban.

In his remarks, the co-founder of CoinDCX, Sumit Gupta, expressed optimism regarding the Indian government’s decision to form an Inter-Ministerial Group to evaluate and release a consultation paper. The executive added,

“This initiative is a significant step toward shaping the future of the rapidly evolving and dynamic Web3 industry in India. As key stakeholders in this sector, we urge the government to actively seek input from domestic businesses. Engaging with local businesses will ensure that the regulatory framework is robust, inclusive, and supportive of innovation.”

No Tax Relief for Indian Crypto Investors

While India does not possess a comprehensive crypto regulatory framework, it mandates that crypto entities register with the Financial Intelligence Unit (FIU-IND) to adhere to anti-money laundering (AML) and counter-terrorism financing standards established by international bodies like the Financial Action Task Force (FATF).

This action has provided a notable credibility enhancement for the industry. However, the current tax regime has been highly contentious, imposing a 30% tax on cryptocurrency profits and a 1% Tax Deducted at Source (TDS) on crypto asset transfers, raising concerns among investors and industry experts regarding its impact on the nation’s crypto market.

In another disappointment for the Indian crypto sector, investor expectations were unmet when Finance Minister Nirmala Sitharaman did not amend the existing crypto tax regulations during her 2024-2025 budget address.