In a significant move to bring cryptocurrency transactions under the tax net, Union Finance Minister Nirmala Sitharaman on Tuesday announced that income from the transfer of any virtual digital asset shall be taxed at a rate of 30 per cent.
Presenting the Union Budget 2022-23 in Parliament, the Finance Minister said, "no deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition."
Further, loss from the transfer of virtual digital assets cannot be set off against any other income, she added.
The Finance Minister also announced the imposition of 1 per cent TDS on payment made in relation to the transfer of virtual digital assets. The move is aimed to capture the transaction details in digital currency.
"Gift of virtual digital asset is also proposed to be taxed in the hands of the recipient," the Finance Minister said.
Replying to a question in the post-budget media briefing, Sitharaman clarified that the proposed tax will be levied on any income from the digital assets and the government has not taken any stand on the legality of cryptocurrencies per se.
"We are not taxing currency that's yet to be issued. Cryptocurrencies are not currencies. RBI is going to issue its digital currency, everything outside is assets created by individuals," she said.
In order to regulate the digital assets market, the government had proposed to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the Winter Session of Parliament. However, the Bill was not tabled with the government deciding to have more consultations.
Referring to the proposed legislation, Sitharaman said it is in the process of stakeholder consultation.
When asked what would be classified as digital assets, Sitharaman said, "It will be decided after the stakeholder consultation."
Sitharaman in her budget speech also announced the introduction of Digital Rupee to be issued by the Reserve Bank of India starting 2022-23.
She said Central Bank Digital Currency (CBDC) will give a big boost to the digital economy.
The minister said the digital currency will also lead to a more efficient and cheaper currency management system and it will use blockchain and other technologies.
( With inputs from ANI )
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