‘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.
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.
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“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.”
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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.