In Brief:
- Finance Minister announced that any income generated from digital assets will be taxed at 30%
- No deductions or exemptions would be made except the cost of acquisition.
- In addition, 1% TDS will be taxed on the transfer of virtual assets above a threshold.
The Finance minister of India Nirmala Sitharaman in her Budget 2022 speech proposed that any income from the transfer of crypto assets will be taxed at 30%. In addition, no deductions and exemptions are allowed except the cost of acquisition.
While presenting the Union Budget 2022, She also announced that loss from the transfer of crypto assets cannot be set off against any other income. She added, there would also be a 1% Tax deducted at Source (TDS) on such transactions and gifts of such assets will also be taxed in the hands of the recipient.
The tax will be levied irrespective of short or long term holdings. Apart from this, in case of losses, those cannot be offset against other income.
The Indian government has been planning to bring digital assets under the tax net for quite some time. Two weeks ago, Nangia Andersen LLP Tax Leader Aravind Srivatsan also hinted that a higher tax rate of 30% should be levied on the income generated from the sale of cryptocurrencies, similar to the winnings from game shows, puzzles and lotteries.
The announcement came just in time as the government is focused on getting the “footprints of the investors” with a regressive tax regime for cryptocurrencies, Investors trading with cryptocurrencies will now need to report gains and losses which can not be offset against any other sort of gains. Along with 1% TDS on transfer of virtual assets above a threshold.
The latest bulletin released yesterday covers parliament’s agenda that includes a crypto training session “a lecture on understanding cryptocurrencies” and its effects on the Indian economy. These efforts are aimed to handle the evolving crypto market and introduce a legal framework to regulate cryptocurrencies.
The Finance minister presented the Union Budget 2022 for the financial year which is set to begin on April 1.
