Relief for investors as govt taxing cryptos
Experts in the field are of the view that the introduction of taxation on transfer of cryptocurrencies by the central government is a positive step as it will give the much-awaited clarity to the investors and traders of virtual digital assets like cryptocurrencies on how their income would be taxed
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In what can be music to the ears of cryptocurrency community in the country, the central government has proposed a 30 per cent tax on income from transfer of virtual digital assets like cryptocurrencies. It will be a big relief to the investors and traders of cryptocurrencies as a clarity on taxation of cryptocurrencies was a long pending demand of crypto community in the country.
Experts in the field are of the view that the introduction of taxation on transfer of cryptocurrencies by the central government is a positive step as it will give the much-awaited clarity to the investors and traders of virtual digital assets like cryptocurrencies on how their income would be taxed.
Presenting the Union Budget for the financial year 2022-23 in Parliament, Union Finance Minister Nirmala Sitharaman made the all important announcement that 30 per cent tax would be 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 receipient.
In her Budget speech, the Finance Minister also proposed that no deduction will be allowed on these gains. A TDS of 1 per cent will also be levied on payment made for transfer, above a monetary threshold, she further said.
In fact, in the run up to the Union Budget, a large number of exchanges dealing with the cryptocurrencies have been demanding to the government to bring clarity about the taxation over the income earned from the crypto assets and GST rules implemented on the trading platforms to ease the operations for all the parties involved.
Given the Indian government's inimical approach towards the cryptocurrency trading and investing, a tax rate was expected on cryptocurrencies to discourage people from entering the field. In fact, the industry had expected it to be treated similar to winnings from lottery, game shows, puzzle and others. But, what is now known is that the crypto players, at large, are not bothered with high tax rates on the new age investment. Instead, they are very keen to get crypto to be classified as a legal asset, with detailed provision over tax deducted at source (TDS) and tax collected at source (TCS). Experts feel that the recognition of crypto in the Budget is one step forward in that direction. Even though the Economic Survey 2022 tabled in the Parliament on January 31, 2022 did not talk about cryptocurrency or Blockchain, there was optimism among the crypto players that some announcements related to crypto tax would be made by the Finance Minister.
(The author is freelance journalist with varied experience in different fields)
