Income

Budget: 30% tax on income from cryptocurrency, virtual assets; 1 percent TDS on buy/sell: The Tribune India

PTI

New Delhi, February 1

Giving clarification on the taxation of cryptocurrencies and other virtual assets, Finance Minister Nirmala Sitharaman on Tuesday proposed a 30% tax on income from transactions in such assets.

In addition, to place these assets under the tax net, it proposed a 1% TDS (withholding tax) on transactions in these asset classes above a certain threshold.

Gifts of crypto and digital assets will also be taxed, she said.

The tax proposals will enter into force on April 1 after the adoption of the Union budget in Parliament.

Responding to requests from wide swaths of the industry, she said the RBI would launch a “digital rupee” based on blockchain technology in 2022-23.

Experts have said that the 30% tax levied on income from the sale of cryptocurrency is similar to the tax rate on winnings from lottery, game shows, puzzles, etc.

Digital currency and assets such as NFTs (non-fungible tokens) have been gaining traction around the world over the past couple of years. Trading in these assets has increased dramatically with the launch of cryptocurrency exchanges. However, India had no clear policy on regulating or taxing these asset classes.

NFTs are unique digital assets with verified ownership rights and details stored on a blockchain.

Chairman of Nangia Andersen India, Rakesh Nangia, said the government has followed discussions on a stable and predictable tax regime and the transfer of virtual digital assets has been placed under taxation.

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