Budget 2022: Tax clarity emerges on digital virtual assets

moneycontrol.com:

In Budget 2022, finance minister Nirmala Sitharaman gave clarity on how digital assets will be taxed. This means that gains from cryptocurrencies will now be taxed. At present, there are no explicit provisions dealing with taxation of cryptocurrencies under the income-tax act, 1961, given that the Cryptocurrency Bill is pending a debate in the Parliament.

In the budget speech, finance minister has proposed that income from transfer of any digital asset (this is likely to include cryptocurrencies and non-fungible tokens or NFTs) will be taxed at 30 percent. No expenditure of any expenditure, except cost of purchase., will be allowed. Also, losses, if any, occurred in transfer of digital assets cannot be set-off against profits. Nischal Shetty, Founder & CEO at WazirX says, “This is a positive step towards positive crypto regulations.”

While the cryptocurrency lobby appears to be happy with the announcement, the Budget announcement also sends a stern message, according to some experts. Ritesh Kumar, Partner of IndusLaw has contradict views. He says, “The 30 percent rate of tax and restriction to set-off losses is a very bold move in discouraging transactions in crypto.”