Government Working On FAQs On The Digital Assets' Taxation
FAQs on taxation of crypto, virtual digital assets in works
The government is working on a set of FAQs (Frequently Asked Questions) on the taxation of cryptocurrencies, which will give a nuanced clarification on the applicability of income tax and GST on virtual digital assets, an official said.
The set of FAQs, drafted by the Department of Economic Affairs (DEA), the RBI and the Revenue Department, would also be vetted by the law ministry, the official added.
"FAQ on taxation of cryptocurrency and virtual digital assets is in works. Although FAQs are for information purposes and do not have legal sanctity, the law ministry's opinion is being sought to ensure that there is no loophole," the official told PTI.
The DEA, Revenue Department and the Reserve Bank are working to ensure that the taxation aspect is clear both for field tax offices and those who deal with cryptocurrencies and other virtual digital assets. The 2022-23 Budget has clarified the levy of income tax on crypto assets. From April 1, a 30 per cent income tax plus cess and surcharges will be levied on such transactions in the same manner as the tax law treats winnings from horse races or other speculative transactions.
The Budget 2022-23 also proposed a 1 per cent TDS (tax deducted at source) on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
The threshold limit for TDS would be Rs 50,000 a year for specified persons, including individuals/HUFs who must get their accounts audited under the I-T Act.
The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.
From the GST perspective, the FAQ is likely to clarify whether
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