Apart from 30% tax imposed on any income from the transfer of any virtual digital asset an additional 1% tax deduction at source (TDS) will also be charged on the payment made in relation to the transfer of any virtual assets.
The minister also made it very clear that no deduction in respect of any expenditure or allowance is to be allowed while computing such income except the cost of acquisition. Loss from the transfer of virtual digital assets cannot be set off against any other income.
Many crypto users send some crypto to other users as a gift. In that case, the receiver will also be taxed at the same rate.
Even though the tax structure is high, rumors that India would ban virtual assets are done away, with this announcement.
However, in the days to come there might be more clarity on how it will be implemented. Do banks have a role, or will crypto exchanges have to play their part?
India’s own CBDC to launch 2022-23 fiscal
The Finance minister also proposed to introduce the Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India (RBI) starting 2022-23.
Elaborating further, she said that the introduction of the Central Bank Digital Currency (CBDC) would give a big boost to the digital economy.
“Digital currency will also lead to a more efficient and cheaper currency management system”, the minister underlined.
There were reports in the last few months that India might have banned cryptocurrency and could also hold holders behind bars, but all these reports have been done merely on assumptions.
The Indian government has taken a Klever decision on the adoption of cryptocurrency and its ecosystem that can help meet the target of a $5 trillion economy by 2025.