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- Published: February 3, 2022 14:26
New Delhi: Following the announcement 30 per cent tax on the transfer of virtual digital assets by Finance Minister Nirmala Sitharaman in her budget speech, the investors are speculating about the new tax structure. There are some big questions that arise in mind. It is because the government is yet to table a Cryptocurrency bill, explaining its policy on virtual digital assets or cryptocurrencies.
Here, we decode how cryptocurrencies will be taxed after Budget 2022.
When will the 30% tax be applicable?
The new tax on cryptocurrency or digital assets will come into force from April 1, 2022. Moreover, the government will charge 1 per cent TDS (Tax Deduction at Source) on all transfers of such assets.
However, one may ask why the government is taking TDS despite charging 30 per cent tax on transfers. It is reported that it will help the government to keep its eye on who buys and sells virtual assets that include NFTs and cryptocurrencies.
Will gifting cryptocurrencies invite tax?
As we know so far before the arrival of cryptocurrency bills, one has to pay tax if he gifts his virtual digital asset to a third party. In the case of a close relative of the family such as a wife or children, the government will not charge anything, as per the market expert.
No set-off allowed
As bad news for those who face any loss in the transfer of virtual assets, it is being said that they will not be able to set off the loss with any other income.
Furthermore, losses can also be not carried forward to the next year for set-off. The new stance of the government on virtual digital assets is being considered punitive.
— Income Tax India (@IncomeTaxIndia) February 1, 2022
However, the real picture in this regard would be clear when the government presents a detailed set of rules.
Transfer and sale are equal
The actual meaning of transfer and sale is different but the government used transfer instead of sale to cover all sorts of transactions. If you sell your crypto coin to anyone, it will be taxed. However, the government will also impose a tax if a Bitcoin holder exchanges his coin with an Ethereum holder.
