Govt Will Tax Crypto Transactions Same As Horse Trading: Stiff 30% Plus Cess, Surcharges | Crypto Bill Passed

Govt Will Tax Crypto Transactions Same As Horse Trading: Stiff 30% Plus Cess, Surcharges | Crypto Bill Passed
Govt Will Tax Crypto Transactions Same As Horse Trading: Stiff 30% Plus Cess, Surcharges | Crypto Bill Passed

For quite sometime now, the cryptocurrency tax and proposed regulation bill have been a topic of discussion among investors and stakeholders in India. Previously, Finance Minister Nirmala Sitharaman did provide clarity on crypto taxation. However, the government is yet to bring legislation to regulate cryptocurrencies.

According to a PTI report, the government has decided to disallow the set off of any losses with gains from any other virtual digital assets and has proposed to tighten the norms for the taxation of cryptocurrencies.

Finance Bill 2022 & Virtual Digital Assets

The PTI report said that as per the amendments to the Finance Bill, 2022, circulated among the Lok Sabha members, the ministry proposes to remove the word ‘other’ from the section relating to the set off of losses from gains in virtual digital assets.

This means that the loss from the transfer of virtual digital assets (VDA) will not be allowed to be set off against the income arising from the transfer of another VDA.

These Virtual Digital Assets (VDA) includes the cryptocurrencies and non-fungible tokens. These assets have recently gained popularity.

PTI reported that a according to the bill, a VDA could be a code or number or token which can be transferred, stored or traded electronically.

Crypto Tax, TDS, Deduction & Bill

•          The Union Budget 2022 has brought in clarity concerning the levy of income tax on crypto assets.

•          From April 1, a 30 per cent I-T plus cess and surcharges, will be levied on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.

•          Also, while computing the income from transfer of VDA, no deduction in respect of any expenditure (other than the cost of acquisition) or allowance will be allowed.

•          The Budget 2022-23 also proposed a 1 per cent Tax Deducted at Source (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.

•          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.

As per the PTI report, the government is working on the legislation to regulate the cryptocurrencies. However, no draft has been released publicly for the same.

In the winter session last year, the bill was listed in the government’s legislative business. The bill has been made to facilitate the creation of framework of the digital currency to be issued by the Reserve Bank of India.

According to the bill listed for the introduction on the Lok Sabha website, the bill “allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”. However, the bill was not brought in during the winter session of Parliament.

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