Tax on Cryptocurrency: The government has proposed to tighten the tax rules on cryptocurrencies. The Finance Ministry has proposed to make the rules for cryptocurrencies more stringent in the Finance Bill 2022. The resolution states that the loss arising from transfer of virtual digital assets (VDA) will not be allowed to be compensated by income from transfer of other digital assets. According to the Finance Bill, a virtual digital asset can be any code or number or token, which can be transferred. This asset can be held and traded electronically.
According to the information, the ministry has proposed to remove the word ‘others’ from the clause relating to compensation for loss along with gains from digital assets in the copies of the Finance Bill, 2022 which has been given to the members of the Lok Sabha. The ministry has said to do away with the exemption for the loss of any other digital asset from the gain in one virtual digital asset.
Virtual Digital Assets
Virtual Digital Assets – VDAs include cryptocurrencies and ‘Non Fungible Tokens’ (NFTs). In the recent past, there has been an increase in the attraction of cryptocurrencies to the people in India. A large number of people are investing in it. Especially among the youth, there is a lot of craze about it.
However, the central government, including the Reserve Bank, has been raising questions from time to time regarding the growing trend of crypto. In the budget presented on February 1, the Finance Minister had announced the imposition of income tax on crypto assets. The government had announced that from April 1, income from digital assets will be levied 30 percent of income tax along with surcharge and cess, like profits from lottery. Also, while computing income from transfer of virtual asset, no deduction will be allowed in respect of any expenditure or allowance.
Government preparing to impose GST
It has been learned that the government is now preparing to bring cryptocurrency under the purview of GST. The government is working on classifying cryptocurrencies as a good or service under the GST law, so that tax can be imposed on its transactions.
Tags: bitcoin, Cryptocurrency, Digital India
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