The government proposed tightening taxation rules on cryptocurrencies by not allowing any loss to be compensated with gains from other digital assets. The ministry has proposed to do away with the word ‘others’ from the clause relating to compensation for loss along with gains from digital assets under amendments to the Finance Bill, 2022, issued to members of the Lok Sabha.
This means that losses arising from transfer of ‘virtual digital’ assets (VDAs) will not be allowed to be offset by proceeds from transfer of other VDAs. According to the Finance Bill, 2022, a ‘virtual digital’ asset can be a code or number or token, which can be transferred or held or can be traded electronically.
NFT also includes: VDAs include cryptocurrencies and ‘non-fungible tokens’ (NFTs), which have gained traction in recent times. Let us tell you that in the budget for the financial year 2022-23, things have been clarified regarding the imposition of income tax on crypto assets. With effect from April 1, 30 per cent income tax along with surcharge and cess will be levied on the income from such transactions.
This tax will be levied in the same way as the profit arising from betting transactions like lottery. Also, while computing income from transfer of VDA, no deduction will be allowed in respect of any expenditure (other than cost of acquisition) or allowance.
The budget also proposes to levy one percent TDS (tax deducted at source) on online digital currency payments above Rs 10,000 in a year. Also, taxation has been proposed on gifting of such property. The limit for TDS will be Rs 50,000 per annum for prescribed individuals. This includes individuals/Hindu Undivided Families.
They will be required to get their accounts audited under the Income Tax Act. The proposal to levy one percent TDS will come into effect from July 1, 2022.