India is all set to tax cryptocurrencies from 1st April 2022. The taxation regime will come into effect as new income tax rules on cryptocurrencies and other digital assets tabled by Finance Minister Nirmala Sitharaman during the Union Budget 2022 get implemented. In Budget 2022, Sitharaman proposed how taxation on earnings on the transfer of virtual assets will work.
These proposals were recently accepted and now taxation of virtual digital assets (VDAs) or "crypto tax" is set to be implemented from April 1. Here's all you need to know about the crypto taxation policy being put in place by the Indian government.
— The new crypto taxation policy will see the government taxing earnings on the transfer of virtual assets at a flat rate of 30%.
— As part of the taxation policy, the government has explained that these gains from the transfer of virtual assets or cryptocurrencies will be exempt from taxation.
— The government has also clarified that the loss from the sale of virtual assets can not be offset against any other revenue.
— Further, the government has also said that the taxation on virtual assets will not only be on the ones they buy but recipients would also be taxed if they received crypto tokens or virtual assets as a gift.
— Additionally, the Finance Ministry has said that a 1% TDS will also be imposed on every payment made for transfers.
— The finance ministry has also confirmed that infrastructure costs incurred in the mining of cryptocurrencies will not be allowed as deductions under the Income Tax Act.
— The new taxation policy clarifies that the virtual digital assets will not just include cryptocurrencies, but also non-fungible tokens (NFTs).