Tax on Cryptocurrency Transactions – 5 Key Points
Hello Guys, Tax on Cryptocurrency in India is here.
As we all know, before the budget, there was a lot of discussion about cryptocurrency.
There was a lot of concern about the future of Cryptocurrency in India. People were worried about – what decision the Indian government is going to take regarding cryptocurrency.
Will cryptocurrency transactions become illegal in India?
Is the Indian government going to ban crypto transactions?
But here is good news for all who are dealing, or investing in crypto currencies in India.
Union budget 2022 proposed a scheme for the taxability of cryptocurrency.
Seeing a phenomenal increase in bitcoins, or other cryptocurrency transactions. The Government of India has introduced a scheme for the taxation of virtual digital assets (VDA) through the union budget 2022.
Any income arising on the transfer of bitcoins, cryptocurrencies, or other Virtual digital assets shall be taxed at the rate of 30 percent.
Income Tax on Crypto Currency India
Scheme for taxation of virtual digital assets (VDA)
Govt. of India has introduced a scheme for taxation of virtual digital assets including bitcoins, cryptocurrency.
Any income from the transfer of any virtual digital asset – bitcoins, and other cryptocurrencies shall be taxed at the rate of 30%.
The above provision will come into effect from assessment year 2022-23.
No deduction allowed on Crypto Income
No deduction shall be allowed in respect of any expenditure or allowance to compute such crypto income except the cost of acquisition.
Set-off of loss not allowed from transfer of Cryptocurrency
No set-off, of loss from the transfer of virtual digital assets, shall be allowed. That means loss from the transfer of bitcoins, cryptocurrencies cannot be set off against any other income.
TDS on Crypto transactions
To track and record the transaction details, TDS@1% is to be deducted on payment made (above monetary threshold limit) in relation to the transfer of virtual digital assets (bitcoins, crypto, etc).
TDS at 1% will be levied above threshold limit.
Gift of virtual digital assets to be taxed in the hands of the recipient.
That means gifts of Bitcoins, or other cryptocurrency shall be taxable in the hands of the gift receiver.
Cryptocurrency Taxation – Applicability
Govt. of India will levy 30% tax on any income made on transfer of virtual digital assets from 1st April 2022. Whereas 1 per cent TDS above threshold will be levied from 1st July 2022.
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