Q. In the context of the Crypto-Asset Reporting Framework (CARF), seen in the news recently, how many of the following statements is/are correct?
1.It primarily aims to prevent money laundering and terrorist financing using crypto-assets.
2.Under the Crypto-Asset Reporting Framework, overseas transactions in cryptocurrencies by Indian citizens will be reported to Indian tax authorities.
3.The framework will lead to the creation of new taxes specifically for crypto-assets.
Select the correct statements using the codes given below:
Explanation –
Statements 1 and 3 are incorrect. The Crypto-Asset Reporting Framework (CARF) primarily aims to increase transparency and reduce tax evasion related to crypto-assets, rather than specifically targeting money laundering or terrorist financing. The CARF is not intended to create new taxes specifically for crypto-assets. Instead, it aims to bring crypto-assets within the existing tax framework and ensure that they are taxed like other financial assets.
Statement 2 is correct. Under the Crypto-Asset Reporting Framework, Overseas transactions in cryptocurrencies by Indian citizens will be reported to Indian tax authorities. This information exchange aims to increase transparency and prevent hiding crypto-asset holdings and income from the government.
Source: Forum IAS
