Mumbai: India’s apex tax body has asked the cryptocurrency players whether the country needs a new law on virtual digital assets (VDA), which agency should administer such a statute, and whether the present tax regime has driven out traders and businesses to foreign shores.

Crypto platforms have been also asked by the Central Board of Direct Taxes (CBDT) if the 1% tax-deducted-at-source (TDS) on every sale was too high, what should be the preferred TDS rate and why, and whether traders should be allowed to set off VDA losses to make the levy more equitable.

A flurry of such questions, raising several other issues on the travails of the trade, have stoked hopes in the crypto industry which has been battered by stiff taxes, regulatory void, and RBI’s customary aversion towards cryptos. Not only are crypto gains taxed at the income tax rate of 30% (unlike the lower capital gains tax on stock profits), VDA traders can’t offset profits with losses to lower the tax outgo.

Many high-street banks are reluctant to offer accounts dedicated to pay or receive funds from crypto trades following central bank senior officials occasionally voicing their reservations on VDAs.

Besides, there is no clarity under RBI rules and the Foreign Exchange Management Act (FEMA) on whether residents can buy and sell cryptos on offshore platforms.

A combination of such factors has caused many large crypto investors to shift their trades-and in some cases even relocate-to Dubai which plans to position itself as the world’s crypto capital.

Chances are India too may change tack, thanks to the crypto adaptation by advanced markets and the digital coins emerging as an asset class and underliers of US mutual funds.

Since China remains the only major economy to impose a blanket ban, the global consensus today clearly leans towards regulation rather than prohibition, said Anand.

According to Purushottam Anand, advocate and founder of Crypto Legal, a blockchain and crypto-focused law firm, “Considering the G20 Synthesis Paper, Finance Track Communique, and the recent Parliamentary Standing Committee on Finance announcement selecting VDAs for a detailed examination this year, it is likely that the government will introduce a comprehensive VDA regulation.>