Union Finance Minister Nirmala Sitharaman announced the levy of 30 percent tax on gains from digital assets.
In her budget speech she said there has been a phenomenal increase in transactions in virtual digital assets.
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 percent, FM Sitharaman said.
Further, there will be no deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of virtual digital asset cannot be set off against any other income.
She further said, in order to capture the transaction details, I also propose 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 is also proposed to be taxed in the hands of the recipient, she said.
In her post budget announcement press conference she said, “The Reserve Bank of India will be issuing a digital currency… A currency is a currency only when it is issued by the central bank, even if it is a crypto. By anything which is outside of that, loosely all of us refer it to the cryptocurrency, they’re not currencies,”
Sitharaman clarified that the government is not taxing the currency that is yet to be issued, but will be taxing everything that prevails outside of it, i.e., assets created by individuals.
“In transacting this asset if there are profits being made, we are taxing that profit at 30%. We’re also tracking every trail of money in that by saying every transaction will be 1% TDS imposed on every transaction in the crypto world,” Sitharaman said.
