Mrs. Nirmala Sitharaman, the Hon’ble Finance Minister, announced revolutionary changes to the virtual asset class in the Budget 2022. The government has officially labeled digital assets, including crypto assets, as “Virtual Digital Assets” for the first time. These include all cryptos such as Swap and others after taking in concern the XWP price, as well as other digital assets such as non-fungible tokens (NFTs).
Though the Indian Government has yet to hold many discussions with the Indian people about the regulations it will impose on ‘Virtual Digital Assets,’ according to the Budget 2022 session, the following are the key points any crypto investor should keep in mind:
- At the end of each fiscal year, income from the transfer of virtual digital assets such as crypto and NFTs will be taxed at 30%.
- When reporting income from the transfer of digital assets, no deduction will be allowed except for the cost of acquisition.
- Losses from digital assets cannot be offset against other sources of income.
- Gifting digital assets will result in taxation in the hands of the receiver. Losses from one virtual digital currency cannot be offset against gains from another virtual digital currency. Because it was announced in Budget 2022, the 1% TDS point should also be included in this list of pointers.
IN INDIA, HOW IS THE 30% CRYPTO TAX CALCULATED?
The flat income tax rate applies to retail investors, traders, or anyone transferring crypto assets in a given fiscal year, and there are no distinctions between short-term and long-term gains. Any profits made from the transfer of virtual assets will be subject to a 30% tax rate. The 30% crypto tax rate will apply regardless of the nature of the income, i.e. whether it is investment income or business income, and regardless of the holding period.
The entire 30% tax on any crypto assets will be deducted from profits earned through various crypto tokens over the course of a fiscal year. This 30% tax will be implemented beginning with the fiscal year 2023-24 assessment.
The government’s tax measures on cryptocurrency are comprehensive, and tax evasion is illegal. Crypto exchanges have been working toward a government-compliant environment in which all trades and investments within the domain have records that will be visible to the tax department.
The 1% TDS is applicable on all sell transactions of crypto assets like Poocoin. according to the revised Income Tax Regulations. This will take effect on July 1, 2022. Please keep in mind that TDS will be deducted from the final sale amount, not just the profits. It makes no difference to TDS whether you make a profit or a loss on your trade. It will be deducted regardless.
CRYPTO TAX ON ANY LOSS FROM VIRTUAL ASSET TRANSFER
There is no deduction (other than the cost of acquisition) allowed against any expenditure or allowance for virtual assets for computational purposes. The government has clarified that any loss incurred as a result of the transfer of virtual assets cannot be offset against any other income.
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