Finance Minister Nirmala Sitharaman has proposed a tax deduction at source on payments for virtual assets to capture details of all such transactions.
RBI will issue a digital rupee in the next financial year
In what is a key decision for all crypto investors in India, Finance Minister Nirmala Sitharaman announced during her Budget speech today that moving forward cryptocurrencies will fall under a tax net, highlighting a 30 percent tax on any income from the transfer of virtual digital assets. She also pointed out that no deductions and exemptions will be allowed on the same.
Gifts in the form of virtual digital assets are also to be taxed on the hands of the recipient, she said, adding that there will be an additional 1 percent tax deducted at source (TDS) on the payments made for the transfer of digital assets.
"There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions are made it imperative to provide for a specified 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," said Niramala Sitharaman while presenting the Union Budget 2022-23.
"No deduction in respect of any expenditure or elements shall be allowed while computing such income except the cost of acquisition for loss from the transfer of virtual digital assets cannot be set off against any other income," she added.
The finance minister did not provide further clarification on what this means for crypto exchanges including GST implications, but the news could be seen as a blow for potential investors looking to diversify their financial portfolio.
"In order to capture the transaction details, I also propose to provide for TDS on payment made in relation to transfer virtual digital assets at a rate of one percent of such considerations about a monetary threshold gift the virtual digital asset is also proposed to be taxed in the hands of the recipient," the finance minister added.
The Reserve Bank of India, the country's central bank will also introduce a digital currency in the next financial year, she said. The nation's central bank has been piloting its Central Bank Digital Currency (CBDC) for several months.
“Introduction of a central bank digital currency will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system,” Sitharaman said.
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