India finally introduces Cryptocurrency tax news The Government announced a flat 30% tax rate on income earned from crypto or digital virtual assets in Budget 2022-22. This was a conservative approach to taxation.
In her Budget Speech 2022 Finance Minister Nirmala Sitharaman stated that income from the transfer of virtual assets would be subject to 30% tax. In the event of losses, she stated that no set-off will be permitted. Gifts in virtual assets will be subject to tax.
Experts and the Cryptocurrency industry welcomed the 30% tax rule on digital assets income. This did not have a negative effect on the prices of many popular crypto tokens such as Bitcoin, ETH and WRX.
Sithraman noted the dramatic increase in transactions in virtual digital assets. He said that the frequency and magnitude of these transactions make it necessary to establish a Cryptocurrency tax news regime.
The Finance Minister stated that income from the transfer of virtual assets will be subject to a 30% tax. Sitharaman stated that there will be no deduction for any expense or allowance when computing such income, except the cost of acquisition. You cannot offset the loss from the transfer of virtual assets against any other income.
The Finance Minister proposed that TDS be applied to payments made in connection with the transfer of virtual assets at a rate of 1% of consideration above a monetary threshold. The recipient of a gift of virtual assets should also be subject to tax.
A Blockchain-based, RBI-backed Central Bank Digital Currency (CBDC), was also announced by the Finance Minister.
Sundara Rajan TK (Partner at DVS Advisors LLP) commented on the announcement. “The clarity regarding tax on digital assets was long overdue and was expected to come this year.” The government’s announcement of a 30% tax on digital assets, along with its launch of its own digital currency is an indication that it intends to discourage such investment. It would only allow HNIs to make such investments, and not cryptos.
Cryptocurrency investors and experts hoped for clarity in Cryptocurrency tax news Budget 2022 regarding taxation of crypto assets’ gains. Experts believe that Nirmala Sitharaman, Finance Minister, may not address the cryptocurrency issue directly during her Budget Speech 2022. The Finance Minister was expected to make announcements about crypto tax.