πͺ#Budget2022 proposed to regulate cryptocurrency, by introducing #tax provisions. The growing popularity of cryptos and the ambiguity regarding its taxation has been a key issue, underlining the need for clarity on this rapidly growing asset class.
πͺAmendments have been proposed to the #FinanceBill 2022. The definition of transfer has been extended to include virtual digital assets (VDA) within it, whether held as capital asset or otherwise. Any transfer of such asset would be subjected to capital gains tax.
πͺMoreover, income from sale of crypto, being speculative in nature, would be taxed at 30%. To capture every transaction detail, the purchaser, while making payment of transfer of VDA to a resident, will be required to deduct TDS at the rate of 1% from the payment made to seller.
πͺThese provisions may appear to be very regressive in the first instance and may discourage trading in VDAs. But at least investors are now clear about the taxes on these instruments, and these steps will usher in a concrete base for VDAs in the economy, through regulations.
πͺSince #RBI is aiming to come up with its own Digital Rupee based on block-chain technology in FY22-23, one can hope that regulations would be eased, and the issues will get addressed in the near future.
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