Centre proposes 30% tax and TDS on cryptocurrency assets

The government on Tuesday announced that transfer of any virtual/cryptocurrency asset will be taxed at 30 per cent. No deduction except cost of acquisition will be allowed and no loss in transaction will be allowed to be carried forward, the finance minister announced in Budget 2022.

The Budget proposed to tax any income from transfer of “virtual digital assets” at 30 per cent. Further, a one per cent tax deducted at source (TDS) will be levied on transfer of such assets above a certain value. This will help capture transaction details and will be a major deterrent against misuse of digital assets for money laundering, financing illegal activities, including drugtrafficking and terrorism.

Gift of virtual digital assets also will be taxed in the hands of the recipient. There will be no provision for deducting any expenditure or allowance while computing the income from these assets.

The Budget defines “virtual digital asset” as any information or code or number or token generated through cryptographic means or otherwise providing a digital representation of value exchanged.

Virtual digital assets have gained popularity and trading in digital assets has increased substantially. By bringing cryptocurrencies under the tax net, the Budget

■ Continued from Page 1 has tried to allay fears regarding a probable ban on cryptocurrency but has put the transactions in a high tax bracket. The announcement of the Reserve Bank of India introducing “digital rupee” in 2022-23 will further strengthen the virtual asset market.

“The Budget provides clarity on taxation and shows the government’s intent to take a businessfriendly approach while protecting the interest of consumers and the exchequer,” said Ashish Singhal, founder and CEO CoinSwitch and co-chair Blockchain and Crypto Assets Council (BACC).

However, a 30 per cent tax with 1 per cent TDS will be a deterrent for several investors keen to jump onto the crypto bandwagon. Cryptos have seen huge corrections in the recent past and the Budget said that losses incurred from transfer of the assets cannot be set off against any other income.

“This seems to be on the higher spectrum but it is a start and we hope to go only forward from this,” said Aishwarya Shivakumar, CEO, Oddz Finance.