New Delhi: In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman on Tuesday announced tax rules for virtual assets, which will impact crypto investors directly. Noting the phenomenal increase in transactions in virtual digital assets, the FM said the magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.
Here are the new tax rules on cryptocurrency:
* Sitharaman announced that gains arising from the sale of virtual assets would be taxed at a flat rate of 30 per cent without any deduction or exemption.
* The loss arising from the sale of any virtual assets cannot be set off against any other income.
* TDS at the rate of 1 per cent would be levied on payments made on transfer of digital assets.
* Gifting of crypto tokens and virtual assets would be taxed at the hands of the recipient at the same rate.
* The new rules include private cryptocurrencies, DeFi (decentralised finance) and non fungible tokens (NFTs). Prima facie, this excludes digital gold, central bank digital currency (CBDC) or any other traditional digital assets.
“This will obviously result in a slowdown in a sector that was growing rather rapidly. Those who trade in crypto and NFTs will be worried,” said Pritha Jha, Partner at Pioneer Legal.
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