Advisory Services
Audit
Consulting
ESG Advisory
RBI Registration
SEBI Registration
IRDA Registration
FEMA Advisory
Compliances
IBC Services
VCFO Services
Growing
Developing
ME-1
ME-2
EU-1
EU-2
SE
Others
Select Your Location
The Budget of 2022 has made the Cryptocurrency investors rife because of the imposition of 30% tax on them. However, mostly people are not aware that the proposed 30% tax is imposed on ‘virtual digital assets’ which includes assets other than just cryptocurrencies. This piece of information attempts to shed some light on the scope of ‘virtual digital assets’ and taxes that will be imposed on income gained from such assets.
Table of Contents
In simple words the scope of ‘virtual digital assets include the following:
The definition of virtual digital assets excludes Central Bank Digital Currency (CBDC), digital gold and any other tradition digital assets. This definition is mainly aimed at taxing cryptocurrencies.
The Finance Bill, 2022 has defined ‘virtual digital assets’ in the following manner:
Following are the changes brought about on taxing the income gained from Digital Virtual Assets
The step of imposing TDS on every transaction has been seen from the market players as a way of tracking the movement of money since there have been concerns about the transactions taking place for unlawful purposes. This also imposes an obligation on the market players to deduct the TDS and report the same to the government.
The market had a long pending demand from the government to provide clarifications about the taxation of the cryptocurrency.
The government is of the view that the usage of digital currency will lead to a more efficient and cheaper currency management system.
Many industry experts have said that by imposing a flat tax on the cryptocurrency at the rate of 30% including with tax on activities such as mining or gifting and no offsetting the loss from other incomes has provided the industry with much awaited clarity regarding the transactions made using virtual digital asset, especially cryptocurrency. However, the industry has cautioned that in the absence of central regulator, it will become difficult for the government to keep a track on such transactions.
Some experts say that the flat tax rate imposed on the virtual digital asset is in line with the taxes imposed on the activities such as winning made from lottery, puzzles, game shows etc.
Leaders from the stock exchanges have thanked the government for the much expected clarity on the taxation aspect of the virtual digital asset and appreciated the intent of the government in protecting the interests of both the consumers and the exchequer.
Other leaders see the move to tax the crypto currencies as a step ahead in legitimising the crypto sector which will pave the way for building a strong crypto ecosystem in India. This will remove the apprehensions of banking sector in extending financial services to the crypto sector.
However, the industry wants some clarity on the following issues:
The industry hopes that the government will give enough time to the exchanges and other related businesses to integrate their system with the proposed changes such as TDS deduction and Bookkeeping.
While one half of the industry is thankful to the government in providing clarity and predictable tax regime providing the much required stability to the crypto industry but at the same time imposition of a flat 30% tax rate on the income generated from it and further not allowing the investors to set off the loss against the other income is seen as a discouraging move for the investors making investments in the virtual digital asset. This aspect of high taxation and restrictions on setting off losses is not in line with the expectations from the government.
Read our Article: Digital Identity of Consumers: The Risk and the Role of Banks
Prabhat has done his BA LLB (Hons) and has been writing research papers since his law school days. His interest in content writing made him pursue a career in legal research and content writing. His core areas of interest are indirect taxes, finance and real estate.
Black money has been the subject of heated political debate in India for a long time. Successiv...
The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Elect...
Since economies are moving towards digitalisation and making it feasible to conduct transaction...
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Every assessee in India is obligated to file an income tax return and make the timely payment o...
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
Are you human?: 5 + 1 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
With the convenience and seamless customer experience that digital banking provides, many consumers are shifting to...
24 Aug, 2020
During Budget Session 2022-2023, Finance Minister Nirmala Sitharamanhas brought some significant changes on taxabil...
02 Jul, 2022
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!