New Delhi: Union Finance minister Nirmala Sitharaman on Tuesday in her budget speech has announced a 30% tax on proceeds of virtual/digital assets. In a big boost to the economy, digital rupee - using blockchain and other technology - will be introduced by the RBI in 2022-23, Finance Minister Nirmala Sitharaman said today as she presented her fourth budget.
Also, to bring such assets under the tax net, she proposed a 1 per cent TDS (tax deducted at source) on transactions in such asset classes above a certain threshold. Gifts in crypto and digital assets will also be taxed, she said. The tax proposals will come into effect from April 1 after the passage of the Union Budget in Parliament.
"I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition. Digital rupee will be issued using blockchain and other technologies. It will be issued by RBI starting 2022-23. This will give a big boost to the economy," FM Sitharaman said.
Meeting demands from large sections of industry, she said the RBI will launch a 'Digital Rupee' based on blockchain technology in 2022-23. Experts said the 30 per cent tax levied on income arising from the sale of cryptocurrency is similar to the tax rate on winnings from the lottery, game shows, puzzles etc.
Digital currency and assets like NFTs (non-fungible tokens) have gained traction globally over the last couple of years. Trading in these assets has increased manifold with cryptocurrency exchanges being launched. However, India did not have a clear policy on either regulating or taxing such asset classes. NFTs are unique digital assets with verified ownership rights and the details are stored on a blockchain.
FM has also not announced any changes in income tax slabs for 2022-23 or lowering of tax rates so far. Sitharaman said, "No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition. Further, loss from the transfer of digital assets cannot be set off against any other income. Further, in order to capture the transaction details, I also propose to provide for TDS on payment made in relation to made in transfer of virtual digital asset at 1 per cent of such consideration above a monetary threshold. The gift of virtual digital asset is also proposed to be taxed in the hands of the recipient."
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