Money laundering laws apply to Cryptocurrencies in India | Fusion - WeRIndia

Money laundering laws apply to Cryptocurrencies in India

Money laundering laws apply to Cryptocurrencies in India

Cryptocurrencies are used as a payment mode in India, but they are not regulated by any central authority.

Due to the lack of stringent rules and guidelines, trading in cryptocurrency trade is considered risky.

Though cryptocurrencies are not regulated in India, the government announced a tax on gains from these assets last year.

Now the central government decided to apply anti-money laundering laws to trading cryptocurrencies or virtual assets.

The government issued a gazette notification stating that anti-money laundering legislation would be applied to crypto trading and related financial services.

As per the notification, trading of cryptocurrencies and their safekeeping are brought under the purview of anti-money laundering legislation. They are as follows:

Transfer of virtual digital assets, exchange between virtual digital assets, and safekeeping or administration of virtual digital assets have been covered by the Prevention of Money-laundering Act 2002.

If any suspicious activity is seen or observed, then Indian crypto exchanges will have to report it to the Financial Intelligence Unit India (FIU-IND).

Digital-asset platforms have to follow similar anti-money laundering standards that are followed by other regulated entities like banks.

The Finance Minister taxation announced a tax on cryptocurrencies in the Union Budget 2022.

The taxation rules on cryptocurrencies are as follows:

  • A 30% tax will be charged on the earnings or gains from the transfer of digital assets and cryptocurrencies.
  • Besides, a 1% TDS is applicable on the payment of the buyer beyond the specified threshold limit.
  • Cryptocurrency investors must disclose the calculated profits and losses in their income.
  • While reporting earnings from the transfer of digital or virtual assets, only the cost of acquisition is allowed, but not any other deduction.
  • However, losses arising from the virtual asset investment cannot be adjusted against other income.
  • If any individual receives cryptocurrencies or digital assets as a gift or transfer, they need to pay the specified tax.

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