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Budget 2022 Cryptocurrency Tax News Highlights: 30% tax, 1% TDS and more crypto investors need to kn

Cryptocurrency Tax News: India has finally introduced crypto tax regime! IN Budget 2022-22, the Government took a conservative stand on taxation by announcing flat 30% on income from digital virtual assets or crypto.

In her Budget Speech 2022, Finance Minister Nirmala Sitharaman said that 30% tax would 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 recipient.

The crypto industry and experts welcomed the 30% tax rule for digital assets income. Not just this, there was no negative impact on prices of most of the popular crypto tokens including Bitcoin, ETH, WRX, SOL, ADA, DOGE, MATIC listed on Indian exchanges.

Noting the phenomenal increase in transactions in “virtual digital assets”, Sithraman said the magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.

“Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent,” the Finance Minister said. Sitharaman further said that no deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. The loss from transfer of virtual digital asset cannot be set off against any other income.

The Finance Minister also proposed 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 has also been proposed to be taxed in the hands of the recipient.

The Finance Minister also said that by 2023, a Blockchain-based and RBI-backed Central Bank Digital Currency (CBDC) will be introduced.
“The clarity on tax of digital assets is long over due and was expected to be provided this year. The announcement of tax @ 30% on digital asset, coupled with the government launching its own digital currency, is an indication that the government intends to discourage the same and would intend that only the HNIs make such investments and that the government shall not permit cryptos as currency.”