Should crypto be part of your savings? Parliament’s concerns reignite investor debate

Parliament’s concerns over rising cryptocurrency investments have brought a familiar personal finance question back into focus: Should volatile digital assets form part of household savings at all?

Parliament flags “alarming” rise in crypto investments

A parliamentary panel on Wednesday termed as “alarming” the investment of thousands of crores of rupees in virtual digital assets like cryptocurrency, PTI reported.

The Parliamentary Standing Committee on Finance, chaired by BJP MP Bhartruhari Mahtab, held a detailed discussion on virtual digital assets.

He noted that India currently does not have a dedicated law governing cryptocurrencies.

“But we find thousands of crores being invested in virtual digital assets, which is actually very alarming, and it is all going out of the country,” PTI quoted Mahtab as saying.

The committee also indicated that taxation of crypto transactions should continue, noting that the Income Tax Act already provides for such provisions.

Mahtab also said the Reserve Bank of India (RBI) remains opposed to allowing or regulating virtual digital assets in the country.

“Closer to speculation than investing,” says expert

Financial planners caution that crypto should not be viewed as a core savings instrument.

“Crypto’s sharp ups and downs make it closer to speculation than reliable investing. For most households, the priority should be protecting capital and building steady growth through proven avenues,” said CFP Shweta Shastri.

She added that any exposure, if taken at all, should be minimal and structured within a broader financial plan.

“It needs a structured financial plan. Most importantly, one should understand the product he or she is investing in. Crypto is highly volatile and a little complicated product. If someone still wishes to participate, it should be a very small, optional allocation after essentials like emergency funds, insurance, and long-term investments are in place,” she said.

Tax framework already in place

Currently, cryptocurrencies in India remain subject to taxation. The Union Budget 2022-23 introduced a 30 per cent tax on income from virtual digital assets, along with applicable cess and surcharges, treating such gains similarly to speculative income.

A 1 per cent tax deducted at source (TDS) was also introduced on crypto transactions above specified thresholds, along with taxation of gifts in virtual assets in the hands of recipients.

The TDS provisions came into effect from July 1, 2022, while taxation on gains has been applicable since April 1, 2022.