Government Of India Announces 30% TAX On All Virtual Assets Like Cryptocurrencies Along With 1% TDS ON All The Transactions

As we all know that the Government of India had been planning to introduce a bill related to virtual assets for a very long time. Finance Minister Nirmala Sitharaman, during her Budget speech in Parliament on Tuesday, announced that digital assets ((which include cryptocurrencies, non-fungible tokens (NFTs), and many others)) will be taxed in India.

A Photo by Team SM

Taxation Of Virtual Digital Assets

For a few years there has been an exceptional increase in virtual assets transactions, Finance Minister Nirmala Sitharaman said the magnitude and frequency of these transactions made it important to provide for a specific tax regime.

 

She proposed that any income from the transfer of a digital asset will be taxed at a whopping 30%. 

A Photo by Team SM

For example- A invests Rs. 10,000 in cryptocurrencies. Later he earned Rs. 15,000 by selling cryptocurrencies. Thus, against an investment of Rs. 10,000, A received Rs.15000 in return. Hence, he will be liable to pay tax @30% on the net income of Rs. 5000 which will be Rs. 1500 (i.e., 30% of 5000).

This is more than what you pay on income from mutual funds or even stocks. And, then there will also be 1% TDS on cryptocurrencies. Cryptocurrencies will be taxed if gifted too. She added that loss from the transfer of virtual digital assets cannot be set off against any other income.

 

Further, no deduction in respect of any expenditure or allowance will be allowed while computing such income except the cost of acquisition. Loss from such transfer of virtual digital assets will also not be eligible to be set off against any other income.

Writer - Sahil Madaan

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