Explained: How cryptocurrencies will be taxed after Budget 2022
In her Budget 2022 speech, finance minister Nirmala Sitharaman said the transfer of virtual digital assets would attract a 30 percent tax. This, by all means, refers to cryptocurrencies, even though India’s Cryptocurrency Bill has not been tabled or discussed in Parliament. For those who have been investing in cryptocurrencies, this may have come as a breather because the general feeling is that at least it won’t be banned now.
Here's a breakdown of some aspects related to the transaction and taxation of virtual digital assets.
Is Bitcoin a virtual digital asset?
To be sure, nowhere in her budget speech or in the budget documents has the word ‘cryptocurrency’ been mentioned. Instead, the budget spoke of ‘virtual digital assets’ and defined them as “any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value which is exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account and includes its use in any financial transaction or investment, but not limited to, investment schemes and can be transferred, stored or traded electronically.”
This definition, specifically, includes non-fungible tokens (NFTs).
When does the new tax become applicable?
The new cryptocurrency – or virtual digital asset – tax comes into force on April 1, 2022.
There are other clauses under the newly proposed Section 115 BBH, including one that states losses cannot be adjusted against other sources of income.
“No deductions or exemptions allowed,” said Rishi Anand, a partner at DSK Legal. “However, more clarity
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