Union Budget 2022: All you need to know about 'crypto tax'
Experts said the 30 per cent tax levied on income arising from the sale of cryptocurrency is similar to the tax rate on winnings from lottery, game shows, puzzles etc.
Union finance minister Nirmala Sitharaman announced on Tuesday that income from digital asset transfers will be taxed at a rate of 30 per cent, specifying that no deductions and exemptions will be allowed. This move is being called 'crypto tax'.
Tabling the Union Budget 2022 in Parliament, Sitharamna said that gifts received in the form of cryptocurrencies will also be taxed at the same rate (at the receiver's end).
Watch: 30% tax on crypto gains, experts hail move
She also announced that the Reserve Bank of India (RBI) will issue a digital rupee in the next financial year.
Sitharaman said in her Budget speech that there has been a " phenomenal increase in transactions in virtual digital assets" and said this has made it imperative to provide for a specific tax regime.
Here's everything you need to know about the 'crypto tax' as announced by Sitharaman in her Budget speech:
• No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of virtual digital asset cannot be set off against any other income.
• “In order to capture the transaction details, I also propose 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 is also proposed to be taxed in the hands of the recipient.
• The tax proposals will come into effect from April 1 after the passage of the Union Budget in Parliament.
• She further said that the RBI will launch a 'Digital Rupee' based on blockchain technology in 2022-23.
• Experts said the 30 per cent tax levied on income arising from the sale of cryptocurrency is similar to the tax rate on winnings from lottery, game shows, puzzles etc.
• Nangia Andersen India Chairman Rakesh Nangia was quoted as saying by news agency PTI that the government has walked the talk on a stable and predictable tax regime and transfer of virtual digital assets have been brought under the taxation ambit.
• The finance bill 2022 defines virtual digital asset as any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value stored or traded electronically.