In a written reply to the Lok Sabha, Chaudhary mentioned the federal government will come out with a definition of digital digital belongings (VDA) with a view to levy 30 per cent tax on earnings from the switch of such belongings.
He mentioned at present cryptocurrencies are unregulated in India.
The 2022-23 Price range has introduced in readability in regards to the levy of earnings tax on crypto belongings. From April 1, a 30 per cent I-T plus cess and surcharges, will likely be levied on such transactions in the identical method because it treats winnings from horse races or different speculative transactions.
The minister mentioned whereas computing the earnings from switch of VDA, no deduction in respect of any expenditure (apart from the price of acquisition) or allowance is allowed.
“The (Finance) Invoice additionally proposes to outline VDA. If any asset falls inside the proposed definition, such digital asset will likely be thought of as VDA for the needs of the Act and different provisions of the Act will apply accordingly,” he mentioned.
He additional mentioned “infrastructure prices incurred within the mining of VDA (eg crypto belongings) won’t be handled as value of acquisition as the identical will likely be within the nature of capital expenditure”, which isn’t allowable as a deduction below the I-T Act.
Additionally, loss from the switch of VDA won’t be allowed to be set off in opposition to the earnings arising from the switch of one other VDA.
The Price range 2022-23 additionally proposed a 1 per cent TDS on funds in the direction of digital currencies past Rs 10,000 in a yr and taxation of such items within the fingers of the recipient. The brink restrict for TDS can be Rs 50,000 a yr for specified individuals, which embody people/HUFs who’re required to get their accounts audited below the I-T Act.
The provisions associated to 1 per cent TDS will come into impact from July 1, 2022, whereas the good points will likely be taxed efficient April 1.
Individually, the federal government is engaged on laws to manage cryptocurrencies, however no draft has but been launched publicly.
