The government has suggested a 30 percent tax on the transfer of any virtual/crypto currency asset.
The finance minister said in Budget 2022 that no deductions other than acquisition costs will be allowed, and no transaction losses will be carried forward.
Virtual digital assets have grown in popularity in recent years, according to the budget memorandum, and the volume of trading in such digital assets has expanded significantly.
In addition, a market is forming in which payment for the transfer of a virtual digital asset can be made using another virtual digital asset. As a result, the Bill proposes a new scheme to provide for the taxation of such virtual digital assets. Investors’ net gains may be reduced as a result of the higher tax rate, which may lessen the appeal of this virtual digital asset.
“The government’s position is obviously to reduce the attractiveness of crypto-assets,” says Harish Prasad, Head Of Banking, India, FIS “This is demonstrated by the highest slab tax rate of 30% on all gains and the lack of any provision to offset losses from transfers.”
Investors and companies in the virtual digital asset and crypto currency ecosystem applauded Finance Minister Nirmala Sitharaman’s decision to tax “any revenue from the transfer of any virtual digital asset” at 30%, describing it as a step toward “mainstreaming excitement” about the asset class.
Investors and exchanges in crypto currencies believe the government’s decision to tax them has provided them with certainty and is the first step toward the asset class’ ultimate legitimization.
The government has failed to introduce The Crypto currency and Regulation of Official Digital Currency Bill, despite the Finance Minister’s caution on the subject. It sought to “establish a facilitative framework for the formation of the official digital currency to be issued by the RBI” and was scheduled for introduction during the previous winter session of Parliament. It aimed to “Prohibit any private crypto currency,” with “limited exceptions” to support the underlying technology”.
Despite this, crypto currency coin exchanges and other experts believe the taxation action is “a welcome step because it legitimizes crypto and indicates an optimistic mindset toward wider acceptance of crypto and non-fungible tokens (NFTs) across stakeholders in the country.”
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