Crypto crackdown: New regulations bring virtual assets under money laundering laws
Providing services related to trading in VDA-fiat, VDA-VDA, or storing and managing VDA will be dealt with under the PMLA.
- Mar 8, 2023,
- Updated Mar 8, 2023 2:12 PM IST
As per a recent gazette notification by the Ministry of Finance, businesses involved in providing services related to Virtual Digital Assets (VDA), including cryptocurrencies, will now be under the ambit of the Prevention of Money Laundering Act (PMLA).
This means providing services related to trading in VDA-fiat, VDA-VDA, or storing and managing VDA will be dealt with under the PMLA.
The notification read, "Participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset... For the purposes of this notification 'virtual digital asset' shall have the same meaning assigned to it in Clause (47A) of Section 2 of the Income-Tax Act, 1961 (43 of 1961).”
Furthermore, the notification also said that VDA shall have the same meaning as given to it in clause (47A) of section 2 of the Income Tax Act of 1961.
Business Today reported last month that failure to pay TDS on crypto transactions or crypto transactions where the payment is partly or wholly in kind under section Section 194S(1) can land the violator of the rule in jail for up to 7 years.
Clause 119 of the Finance Bill 2023 reads, “It is proposed to amend clause (a) of the said section so as to make it applicable if a person fails to pay to the credit of the Central Government the tax deducted at source by him as required by or under the provisions of Chapter XVII-B.”
“It is further proposed to substitute clause (b) of the said section to provide that failure to pay tax or ensure payment of tax, to the credit of the Central Government as required by or under sub-section (2) of section 115-O, the proviso to section 194B, the first proviso to sub-section (1) of section 194R or the proviso to sub-section (1) of section 194S shall be eligible for initiating proceedings under the section,” the bill noted.
Moreover, in the Union Budget of 2022-23, Finance Minister Nirmala Sitharaman announced a 30 per cent income tax on profit on the sale of VDAs, including cryptocurrencies and NFTs. Moreover, a 1 per cent Tax Deducted at Source (TDS) under section 194S of the Income Tax Act had also been introduced on the transfer of VDAs.
As per a recent gazette notification by the Ministry of Finance, businesses involved in providing services related to Virtual Digital Assets (VDA), including cryptocurrencies, will now be under the ambit of the Prevention of Money Laundering Act (PMLA).
This means providing services related to trading in VDA-fiat, VDA-VDA, or storing and managing VDA will be dealt with under the PMLA.
The notification read, "Participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset... For the purposes of this notification 'virtual digital asset' shall have the same meaning assigned to it in Clause (47A) of Section 2 of the Income-Tax Act, 1961 (43 of 1961).”
Furthermore, the notification also said that VDA shall have the same meaning as given to it in clause (47A) of section 2 of the Income Tax Act of 1961.
Business Today reported last month that failure to pay TDS on crypto transactions or crypto transactions where the payment is partly or wholly in kind under section Section 194S(1) can land the violator of the rule in jail for up to 7 years.
Clause 119 of the Finance Bill 2023 reads, “It is proposed to amend clause (a) of the said section so as to make it applicable if a person fails to pay to the credit of the Central Government the tax deducted at source by him as required by or under the provisions of Chapter XVII-B.”
“It is further proposed to substitute clause (b) of the said section to provide that failure to pay tax or ensure payment of tax, to the credit of the Central Government as required by or under sub-section (2) of section 115-O, the proviso to section 194B, the first proviso to sub-section (1) of section 194R or the proviso to sub-section (1) of section 194S shall be eligible for initiating proceedings under the section,” the bill noted.
Moreover, in the Union Budget of 2022-23, Finance Minister Nirmala Sitharaman announced a 30 per cent income tax on profit on the sale of VDAs, including cryptocurrencies and NFTs. Moreover, a 1 per cent Tax Deducted at Source (TDS) under section 194S of the Income Tax Act had also been introduced on the transfer of VDAs.