INDIA Law and Practice Contributed by: Vijayendra Pratap Singh, Asif Ahmed, Tanmay Sharma and Bhanu Jindal, AZB & Partners
tects any banker from being compelled to pro - duce any bankers’ book, and from appearing as a witness to prove the matters, transactions and accounts recorded in such books, unless specif - ically mandated by the court for a special cause. Furthermore, the Indian Information Technology Act, 2000 also recognises financial informa - tion to be sensitive personal data or informa - tion – ie, “financial information such as a bank account, credit card, debit card or other payment instrument detail” and prohibits any disclosure thereof unless personally consented to by the entity/person to whom it belongs, or without consent when sought by investigating agencies in accordance with the law. These obligations have been further bolstered under the newly enacted Digital Personal Data Protection Act, 2023. However, the rules made therein are yet to be notified and brought into effect. Lastly, the Companies Act also provides for a safeguard against disclosure of third-party sen - sitive financial information, where such informa - tion is sought by bankers of any company under investigation (other than the information of the company itself). While the right to banking secrecy has been rec - ognised, as indicated, this is not absolute. It is possible under law to compel a bank, through summons and processes issued in accordance with the law, to disclose such information as it has in its possession. This right is clearly recog - nised in favour of investigating agencies, either through periodic reporting requirements (such as those under the PMLA) or through a specific power to issue summons for disclosure of infor - mation vested with various authorities (such as the police, income tax authorities, ED, customs authorities, etc), who have been given power to compel a person to provide their books of
accounts or face a penalty for non-compliance as specified under various statutes. Such stat - utes include: • the Income Tax Act, 1961; • the Foreign Exchange Management Act, 1999; • the Customs Act, 1962; and • the BNSS. In addition to this, the police, income tax authori - ties, ED, custom authorities, etc, have the power to search for and seize documents from banks in the course of their investigation. Lastly, banks and intermediaries are also subject to limited disclosure under the Right to Information Act, 2005 where information held by them qualifies There is no legislation in India that specifically deals with crypto-assets. While the government of India introduced the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 to prohibit private crypto-assets and create a framework for a digital currency issued by the Reserve Bank of India (RBI), this has not mate - rialised into substantive legislation. The govern - ment of India has stated that any regulation on crypto-assets will be finalised only after interna - tional consultation. The Finance Act, 2022 (the “Finance Act” ) rec - ognised, for the first time, taxation of certain virtual digital assets as a basis for recognising the income generated from such virtual digital assets. However, this has not expressly legiti - mised virtual digital assets. The Finance Act spe - cifically refers to crypto-assets as “virtual digital assets” for the purposes of taxing any income from such assets at 30% and every transaction as public information. 7.3 Crypto-Assets
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