The Union Budget 2022-23 brought to the virtual digital asset (VDA) industry a levy of a flat 30 percent tax on gains from trade applicable from April 1, 2022.
On the lines of taxing Virtual Digital Assets (VDA), the union finance ministry has informed that for FY2022-23, direct tax collected by way of tax deducted at source under section 194S of the Income Tax Act, 1961, on payments made upon transfer of Virtual digital Assets, aggregates to Rs 157.9 crore upto March 20, 2023.
The ministry gave a written reply to Janata Dal (United) MP Ram Nath Thakur who had asked about details of tax received by the government from cryptocurrency.
Crypto assets are unregulated in India. However, the government brought a comprehensive taxation regime for the transfer of VDAs under the preview of the Prevention and Money-laundering Act, of 2002.
RBI has recommended that crypto assets should be prohibited. Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage, the ministry said in the house.
Taxation of VDAs is a major step by the government in providing clarity to investors and entrepreneurs transacting in digital assets in India and is a step in the direction of regulating the crypto industry.
What is virtual digital asset and provisions made for regulation in Budget 2022-23?
It means cryptocurrencies, DeFi (decentralised finance) and non-fungible tokens (NFTs). Prima facie, excludes digital gold, central bank digital currency (CBDC) or any other traditional digital assets, and hence aimed at specifically taxing cryptocurrencies.
The government will be taxing the profits which are made during transactions of such private created assets or virtual digital assets at 30 percent. This will be done regardless of any long-term or short-term holding by the investor.
TDS will be imposed on payments for the transfer of crypto assets at a rate of 1 percent for transactions over a certain threshold. No deduction on expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.
First Published: Mar 28, 2023 3:18 PM IST
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