Parliament Standing Committee on Finance to review Virtual Digital Assets; RBI, ICAI to take part

The Parliament's Standing Committee on Finance held a session on July 2, 2026, dedicated to the subject "A Study on Virtual Digital Assets (VDAs) and Way For...

What Happened

The Parliament's Standing Committee on Finance held a session on July 2, 2026, dedicated to the subject "A Study on Virtual Digital Assets (VDAs) and Way Forward," as part of an ongoing review to shape India's regulatory approach to crypto assets.
The Reserve Bank of India (RBI) presented its assessment of VDAs to the committee from 11:00 to 12:30 hrs, covering financial stability risks, monetary policy implications, money laundering concerns, and investor protection.
The Institute of Chartered Accountants of India (ICAI) participated in a subsequent session, providing perspectives on VDA taxation and accounting treatment.
The meeting is part of a series: the committee had earlier heard from domestic crypto exchanges (December 2025) and from the Financial Intelligence Unit (FIU-IND) and Central Board of Direct Taxes (CBDT) in January 2026.
A proposed multi-regulator model under discussion would split VDA oversight between SEBI (for crypto exchanges and security-like tokens), RBI (for cross-border flows and foreign exchange implications), and the Finance Ministry (for policy and taxation).

Static Topic Bridges

Parliamentary Standing Committees: Role and Powers

Parliamentary Standing Committees are permanent committees of Parliament that perform the essential functions of legislative scrutiny, policy oversight, and ministerial accountability between legislative sessions. The Department-Related Standing Committee (DRSC) on Finance examines bills, budgets, and policies related to the Finance Ministry, RBI, SEBI, and associated bodies. The Standing Committee system was strengthened after 1993 when 17 DRSCs were created; the number has since been expanded to 24.

Standing Committees scrutinise demands for grants (budget allocations) of ministries before they are voted on in Parliament.
They examine bills referred by the Speaker/Chairman and can call expert witnesses and ministry officials.
Their recommendations are not binding on the government but carry significant weight and are usually tabled in Parliament.
The Standing Committee on Finance is a Joint Committee — it has members from both Lok Sabha and Rajya Sabha.
The committee can summon government officials, experts, industry representatives, and regulators — as this VDA review demonstrates.
Role in policy-shaping: Committee reports have historically influenced major legislation, from banking reforms to insurance regulation.

Connection to this news: The Standing Committee on Finance examining VDAs is an example of parliamentary committees performing prospective policy oversight — helping shape legislation before it is drafted, not just scrutinising existing laws. The multi-stakeholder approach (RBI, ICAI, crypto exchanges, FIU-IND, CBDT) illustrates the committee's use of its power to convene diverse expert witnesses.

Virtual Digital Assets (VDAs): Legal Definition and Taxation in India

The term "Virtual Digital Asset" was formally defined in Indian law through the Finance Act, 2022, which introduced Section 2(47A) into the Income Tax Act. A VDA is defined as any information, code, number, or token (not being Indian or foreign currency) generated through cryptographic means, providing a digital representation of value that can be transferred, stored, or traded electronically. This includes cryptocurrencies and Non-Fungible Tokens (NFTs) but excludes the RBI's Central Bank Digital Currency (CBDC).

Section 115BBH (Income Tax Act): Income from transfer of VDAs taxed at a flat 30% plus 4% cess, with no deductions allowed except the cost of acquisition. No set-off of VDA losses against other income; no carry-forward of losses.
Section 194S (Income Tax Act): 1% TDS on transfer of VDAs above ₹50,000 (₹10,000 for specified persons); effective from July 1, 2022.
India does not currently have a comprehensive VDA regulation law — only a tax framework exists. There is no legal framework governing crypto exchanges, custody, investor protection, or trading rules.
30% tax applies regardless of holding period — no distinction between short-term and long-term gains.
Crypto swaps (exchanging one crypto for another) also attract 30% tax based on INR value at the time of exchange.

Connection to this news: The Standing Committee's review reflects the inadequacy of the current approach — taxation without regulation. The 30% tax has been in place since 2022, but the absence of a regulatory framework creates gaps in investor protection, anti-money laundering compliance, and institutional oversight that the committee is now trying to address.

RBI's Position on Virtual Digital Assets

The Reserve Bank of India has consistently expressed concern about private cryptocurrencies, viewing them as a threat to monetary policy transmission, financial stability, and the integrity of the payments system. The RBI's primary concern is that if cryptocurrency use becomes widespread, the central bank's ability to control money supply, interest rates, and inflation could be undermined.

RBI Governor has repeatedly called for a "complete ban" on private cryptocurrencies, arguing they have no underlying asset value.
RBI launched its own Central Bank Digital Currency (CBDC) — the Digital Rupee (e₹) — in pilot form in December 2022, covering both wholesale (e₹-W) and retail (e₹-R) segments.
The RBI Act, 1934 grants the RBI authority over currency and monetary policy; its concern with VDAs is that they operate outside this framework.
Key RBI concerns: Dollarisation risk (crypto transactions denominated in USD-linked stablecoins), capital flight, money laundering through decentralised channels, and de-anonymisation challenges.
The Financial Action Task Force (FATF) has recommended that countries apply AML/CFT (Anti-Money Laundering / Countering the Financing of Terrorism) rules to VDAs and VDA service providers.

Connection to this news: RBI's appearance before the Standing Committee is significant — the central bank is likely to reiterate its preference for strong regulation or prohibition of private VDAs while defending the CBDC as the regulated alternative. The committee must weigh RBI's systemic concerns against the economic case for a regulated crypto industry.

Proposed Multi-Regulator Model for VDAs

Given that VDAs have characteristics overlapping multiple regulatory domains — securities (SEBI), foreign exchange (RBI), and taxation (MoF) — a multi-regulator approach is being discussed rather than assigning all oversight to a single body. This mirrors the approach in some other jurisdictions (e.g., the US split between SEC and CFTC for crypto assets).

SEBI: Would regulate crypto exchanges and security-type tokens (tokens that represent ownership/profit-sharing).
RBI: Would regulate cross-border VDA flows, stablecoin use, and foreign investment-linked crypto transactions under FEMA (Foreign Exchange Management Act, 1999).
Finance Ministry: Would retain oversight of policy, taxation, and inter-regulatory coordination.
Financial Intelligence Unit-India (FIU-IND): Would handle AML/CFT reporting obligations from VDA service providers; India already registered crypto exchanges with FIU-IND in 2023.
India's approach is being watched globally as a potential model for emerging-market crypto regulation.

Connection to this news: The Standing Committee's multi-stakeholder consultation — RBI, ICAI, exchanges, FIU-IND, CBDT — is precisely designed to gather input to finalise which regulatory architecture India will adopt. The outcome could lead to a dedicated VDA regulation bill being introduced in Parliament.

Key Facts & Data

Committee: Standing Committee on Finance (Lok Sabha), Parliament
Meeting date: July 2, 2026
Subject: "A Study on Virtual Digital Assets (VDAs) and Way Forward"
RBI session: 11:00–12:30 hrs on July 2
VDA defined in law: Section 2(47A), Income Tax Act (via Finance Act 2022)
VDA tax rate: 30% flat + 4% cess (Section 115BBH)
TDS rate on VDA transfers: 1% (Section 194S); effective from July 1, 2022
TDS threshold: ₹50,000 (general); ₹10,000 (specified persons)
No loss set-off or carry-forward permitted for VDA losses
Previous committee hearings: Crypto exchanges (December 2025); FIU-IND and CBDT (January 7, 2026)
India's CBDC (Digital Rupee) pilot launched: December 2022
FIU-IND registration of crypto exchanges: 2023
Proposed multi-regulator: SEBI (exchanges), RBI (cross-border), Finance Ministry (policy/taxation)
Number of DRSCs in Parliament: 24 (expanded from original 17 in 1993)
FATF: Recommends AML/CFT rules for VDA service providers