‘Crypto tax’ is here. India imposes 30% tax on proceeds of digital assets

Union Budget 2022-23: Finance minister Nirmala Sitharaman on Tuesday announced a 30 per cent tax on the proceeds made on the transfer of virtual digital assets.
Law enforcement agencies are analysing data pertaining to business activities of cryptocurrency exchanges and investors in crypto assets. (File Photo)
Law enforcement agencies are analysing data pertaining to business activities of cryptocurrency exchanges and investors in crypto assets. (File Photo)
Updated on Feb 01, 2022 01:01 PM IST
Copy Link
Written by Joydeep Bose, Hindustan Times, New Delhi

In a significant move that is believed to have brought cryptocurrencies and non-fungible tokens (NFTs) under a tax net, finance minister Nirmala Sitharaman on Tuesday announced a 30 per cent tax on any income from the transfer of virtual digital assets, specifying that no deductions and exemptions will be allowed.

The gifts are to be taxed on the hands of the recipient, she said, adding that there will also be a 1 per cent tax deducted at source (TDS) on the payments made for the transfer of digital assets. It was also announced that any loss made on the transaction of such digital assets cannot be set off against any other gain.

Also Read | Union Budget 2022: E-passports, LIC IPO and other highlights from Nirmala Sitharaman's speech

“Any income from virtual digital assets is taxable at 30 per cent,” the finance minister said while presenting the federal budget. “There will be no deduction with exception of the cost of acquisition. The TDS is applicable beyond a specified monetary threshold, and the gift of virtual currencies is taxable in the hands of the recipient.”

In her Union Budget 2022 announcement, finance minister Nirmala Sitharaman also said that the country's central bank, the Reserve Bank of India (RBI), will introduce a digital currency in the next financial year using blockchain and other supporting technology.

“Introduction of a central bank digital currency will give a big boost to the digital economy,” Nirmala Sitharaman said on Tuesday while presenting the federal budget. “Digital currency will also lead to a more efficient and cheaper currency management system.”

Also Read | ‘Is cryptocurrency legal now?’ asks Congress as Centre imposes 30% tax on digital assets transfer

Ahead of the Union Budget announcement this year, speculation was rife regarding the central government's official stance towards cryptocurrencies and any potential taxes that might be imposed on the same. While many imagined that India might ban cryptocurrencies, others suggested that strict regulatory measures might be imposed to keep the digital token transactions under check.

Earlier, India's central bank had voiced “serious concerns” around private cryptocurrencies on the grounds that these may cause financial instability.

SHARE THIS ARTICLE ON
Close Story
SHARE
Story Saved
×
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Tuesday, June 28, 2022