New Delhi, March 29: Last week the Lok Sabha passed the Finance Bill, 2022 which included approval on ”crypto tax” amendments.
Following it’s approval, taxation of virtual digital assets (VDAs) or “crypto tax” proposed in the Union Budget 2022-23 is set to be implemented from April 1.
Union Minister of Finance Nirmala Sitharaman in the Union Budget 2022 announced that “any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.”
Crypto Tax Rules
Sitharaman said that the scheme would not allow any deduction in respect of any expenditure or allowance while computing such income except cost of acquisition.
Further she said, loss from transfer of virtual digital asset cannot be set off against any other income. Lok Sabha Passes Finance Bill 2022, Marks Completion of Budget Exercise
It has also proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act. Cryptocurrency Tax in India: Lok Sabha Approves ‘Crypto Tax’ Amendments
The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.
From April 1, a 30 per cent I-T plus cess and surcharges will be levied in the same manner as it treats winnings from horse races or other speculative transactions.
Taxation For Cryptocurrency
According to the bill, section 115BBH of the Bill deals with tax on virtual digital assets. Clause (2)(b) prevents loss on the trading of crypto assets from being set off against income under “any other provision” of the IT Act.
As per the amendment, the word “other” is dropped. Under the amended law, loss from crypto assets cannot be set off against gains in crypto assets as well.
According to the Finance Bill, 2022, a VDA could be a code or number or token which can be transferred, stored or traded electronically.
The VDAs will include prevailing cryptocurrencies and non-fungible tokens (NFTs) which has gained fad over the past couple of years.
Deduction
Minister of State for Finance Pankaj Chaudhary has said that infrastructure cost incurred in the mining of cryptocurrencies or any virtual digital assets will not be allowed as deduction under the Income Tax Act.
(The above story first appeared on Morning Tidings on Mar 29, 2022 07:18 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website morningtidings.com).
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