Budget 2023: Govt to tax cryptocurrencies at flat rate of 30%

Budget 2022: Govt to tax cryptocurrencies at flat rate of 30%

The Finance Minister Nirmala Sitharaman on Tuesday proposed to tax gains from transfer of virtual assets at a flat rate of 30 per cent in her Budget speech. She proposed that no deduction will be allowed on these gains The loss arising from the sale of the virtual assets cannot set off against the any other income, the government cleared. Also, gifting of crypto tokens and the virtual assets would be taxed at the hands of the recipient.

A TDS of 1 per cent will also be levied on payment made for transfer, above a monetary threshold, FM said. Ahead of the Budget, a majority of exchanges have demanded clarity about the taxation over the income earned from the crypto assets and GST rules implemented on the trading platforms to ease the operations for all the parties involved.

A tax rate was expected on cryptocurrencies as the government does not promote the trading in them. The industry had expected it to be treated similar to winnings from lottery, game shows, puzzle and others.

Going by the opinion shared ahead of the Budget, industry players, at large, were not bothered with high rates on the new age investment, but were keen to get crypto to be classified as a legal asset, with detailed provision over tax deducted at source (TDS) and tax collected at source (TCS). A recognition in the Budget, is perhaps one step forward in that direction.

Introduction of taxation on transfer of Virtual digital asset is a welcome move and will give upfront clarity to the investors on how their income would be taxed, said Anish Shah, BDO India LLP.