Crypto Tax rules in India: How will cryptocurrency assets be taxed from April 1? – India Today

Cryptocurrency investors in India will have to pay tax under the new scheme for Taxation of Virtual Digital Assets from April 1. The Union Budget 2022-23 brought in clarity pertaining the levy of income tax on crypto assets.

Financial Minister Nirmala Sitharaman in the Union Budget 2022 announced that "any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent."

- From April 1, a 30 per cent I-T plus cess and surcharges will be levied in the same manner as it treats winnings from horse races or other speculative transactions.

- One per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.

- The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.

- The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.

Infrastructure cost incurred in the mining of cryptocurrencies or any virtual digital assets will not be allowed as deduction under the Income Tax Act, Minister of State for Finance Pankaj Chaudhary has said

In a written reply to the Lok Sabha, Chaudhary said the government will come out with a definition of Virtual Digital Assets (VDA) with a view to levy 30 per cent tax on income from the transfer of such assets.

Also, loss from the transfer of VDA will not be allowed to be set off against the income arising from the transfer of another VDA, Chaudhary said.

The minister said that while computing the income from transfer of VDA, no deduction in respect of any expenditure (other than the cost of acquisition) or allowance is allowed.

"The (Finance) Bill also proposes to define VDA. If any asset falls within the proposed definition, such virtual asset will be considered as VDA for the purposes of the Act and other provisions of the Act will apply accordingly," he said.

Further, he said, "infrastructure costs incurred in the mining of VDA (eg. crypto assets) will not be treated as cost of acquisition as the same will be in the nature of capital expenditure", which is not allowable as a deduction under the I-T Act.

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Crypto Tax rules in India: How will cryptocurrency assets be taxed from April 1? - India Today