New Delhi: In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman announced tax rules for virtual assets on Tuesday, which will directly impact crypto investors. Noting the phenomenal increase in transactions in virtual digital assets, the FM said that the magnitude and frequency of such transactions made it necessary to provide for a specific tax regime.
Here are the new tax rules on cryptocurrency:
* Sitharaman announced that gains arising from the sale of virtual assets would be taxed at a flat rate of 30 percent without any deductions or exemptions.
* The loss arising from the sale of any virtual assets cannot be offset against any other income.
* TDS will be taxed at a rate of 1 percent would be levied on payments made on transfer of digital assets.
* Gifts of crypto tokens and virtual assets would be taxed at the hands of the recipient at the same rate.
* The new rules include private cryptocurrencies, DeFi (decentralised finance), and non-fungible tokens (NFTs). Prima facie,, this excludes digital gold, central bank digital currency (CBDC), or any other traditional digital assets.
“This will obviously result in a slowdown in a sector that was growing quite rapidly. Those who trade cryptocurrencies and NFTs will be worried,” said Pritha Jha, partner at Pioneer Legal.
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