This is how cryptocurrency assets will be taxed from April 1 in India. 10 dots


Cryptocurrency assets will be taxed: From April 1, 2022, certain changes in income tax rules announced by Finance Minister Nirmala Sitharaman during the presentation of the Union Budget 2022 will be implemented. artwork. One of them is a tax on cryptocurrency and other digital assets. Nirmala Sitharaman in the Union Budget 2022 announced that “any income derived from the transfer of any virtual digital asset will be taxed at the rate of 30%”.

“The new 30% flat tax regime on income from crypto assets from April 1, 2022 will dampen sentiment for the new asset class. However, we hope that crypto investors will support their investment thesis and stick with investing for longer periods of time,” said Kunal Jagdale, Founder of BitsAir Exchange.

How cryptocurrency assets will be taxed from April 1 explained in 10 points

1) 30% tax on digital assets: the gain on the sale of cryptocurrency would be taxed at a rate of 30%. This taxation would certainly impact after-tax returns from cryptocurrency transactions. “Only the deduction of the consideration for the sale can be the “cost of acquiring the cryptocurrency”. No other expenses can be deducted. Due to the lack of compensation for losses from other sources of income , it will become very difficult to have a profitable cryptocurrency net trading,” said Sujit Bangar, founder of Taxbuddy.com.

2) If you bought cryptos for 15k and I sold it for 45k, your direct win is 30k.

It would be taxed as follows:

Selling Consideration 45k

Less acquisition cost 15k

Taxable gain 30k

Income tax @30% 9k

3) TDS on cryptocurrency transactions: TDS @1% was offered for transactions involving cryptocurrencies. Sujit Bangar, founder of Taxbuddy.com, said we could sell cryptocurrency for profit or loss, but TDS @ 1% would definitely happen. “We can claim a refund of TDS made on a transaction involving a loss. Therefore, it would be recommended to file a tax return if you have entered into cryptocurrency transactions,” Sujit Bangar added.

4) The threshold limit for TDS would be 50,000 per year for specified persons, which includes individuals/HUF who are required to have their accounts audited under the IT Act.

5) The 1% DST provisions will come into effect on July 1, 2022, while winnings will be effectively taxed on April 1.

6) Crypto received as a gift would be taxable: If you receive a gift in the form of cryptocurrency or any other virtual digital asset, it would be taxable as a post-budget 2022 gift.

7) Finance Minister Nirmala Sitharaman has stated that the scheme will not allow any deduction in respect of any expense or allowance when calculating this income except the cost of acquisition.

8) Last week, the Lok Sabha approved the Virtual Digital Asset (VDA) or “crypto tax” taxation rules that were proposed in the 2022-23 Budget by approving the 2022 Finance Bill.

9) Under the bill, Section 115BBH deals with taxes on virtual digital assets, while clause (2)(b) prohibits deducting a loss of crypto assets from income under “any other provision” computer law. Additionally, the word “other” is removed for VDAs as part of the bill.

“The 2022 finance law has inserted a new section for the taxation of virtual digital assets. As of April 1, it is proposed to tax any income derived from the transfer of a virtual digital asset at a flat rate of 30%. It was further clarified that any loss incurred on the transfer of a virtual asset could not be offset by any income (including gain from the sale of another virtual digital asset) under any provision of law. . Only the cost of acquiring such an asset can be claimed in this calculation. This makes the position of the government very clear regarding the taxation of a virtual digital asset. It would be interesting to see how value is assigned to an exchange of virtual digital assets and how a donation of such an asset is assessed,” said Sridhar R, Partner-Tax, Grant Thornton Bharat

10) This would mean that the loss resulting from the transfer of Virtual Digital Assets (VDA) cannot be compensated by the income resulting from the transfer of another VDA.

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