Cryptocurrency Tax Budget Impact Highlights: Experts welcome 30% tax rate on income from virtual digital assets
Crypto Taxation in Budget 2022 Updates, Union Budget 2022 Cryptocurrency Taxation Highlights: FM Sitharaman in her Budget speech has proposed the tax on income generated at the sale of any digital asset without any deductions, amid a growing proliferation of assets like Bitcoin even as the regulatory structure on them remains unclear.
Cryptocurrency Tax News in Union Budget 2022 Updates: India’s crypto tax regime is finally here! The Government has taken a conservative stand on taxation of crypto assets by announcing flat 30% on income from such income. In her Budget Speech 2022, Finance Minister Nirmala Sitharaman said that 30% tax would charged on income from transfer of virtual digital assets. She further said no set off will be allowed in case of losses. Also, gifts in virtual digital assets would be taxed in the hands of the recipient.
The crypto industry and experts welcomed the 30% tax rule for digital assets income. Not just this, there was no negative impact on prices of most of the popular crypto tokens including Bitcoin, ETH, WRX, SOL, ADA, DOGE, MATIC listed on Indian exchanges.
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“Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent,” the Finance Minister said. Sitharaman further said that no deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. The loss from transfer of virtual digital asset cannot be set off against any other income.
The Finance Minister also proposed to provide for TDS on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold. Gift of virtual digital asset has also been proposed to be taxed in the hands of the recipient.
The Finance Minister also said that by 2023, a Blockchain-based and RBI-backed Central Bank Digital Currency (CBDC) will be introduced.
Commenting on the announcement, Sundara Rajan TK, Partner at DVS Advisors LLP, said: “The clarity on tax of digital assets is long over due and was expected to be provided this year. The announcement of tax @ 30% on digital asset, coupled with the government launching its own digital currency, is an indication that the government intends to discourage the same and would intend that only the HNIs make such investments and that the government shall not permit cryptos as currency.”
Ahead of the Budget, Cryptocurrency experts and investors were expecting clarity on taxation of gains from crypto assets in Budget 2022. Some experts believed that Finance Minister Nirmala Sitharaman may not touch upon the cryptocurrency issue directly in her Budget Speech 2022. However, some announcements related to crypto tax were expected to be made by the Finance Minister.
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According to Principal Principal Economic Adviser Sanjeev Sanyal, the Government was expected to take a balanced view on cryptocurrencies. Meanwhile, the Economic Survey 2022 tabled in the Parliament on Monday (January 31, 2021) did not talk about cryptocurrency or Blockchain. It is also highly unlikely that Cryptocurrency Regulation Bill will be introduced in the Parliament in the ongoing Budget Session.
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“As you know, this is a matter of some debate, both inside the government, in the Ministry of Finance, and even in Parliament. So, this is something that is currently in discussion…There are some financial stability issues. But there are also other arguments that are made in terms of innovation and so on….obviously a balanced view on this will be taken,” Sanyal was quoted as saying by PTI.
Stay tuned for all updates and analysis on cryptocurrency and crypto taxation from Budget 2022
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