New Delhi, Feb 1: In a major blow to crypto players, the Budget 2022 has proposed to tax income from transfer of any virtual digital asset at the rate of 30%.
Gift of virtual digital asset is also proposed to be taxed in the hands of the recipient. While announcing the scheme for taxation of virtual digital assets, Finance Minister Nirmala Sitharaman said that there has been a phenomenal increase in transactions in virtual digital assets.
“The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent,” Sitharaman said as she presented the Budget in Lok Sabha on Tuesday.
In order to capture the transaction details, Finance Minister also proposed to provide for TDS on payment made in relation to transfer of virtual digital asset at the rate of 1% of such consideration above a monetary threshold.
Reacting to the tax proposal, Om Malviya, President, Tezos India said that he is happy to note that the FM has announced crypto tax provisions in this budget, legitimising crypto transactions in some way.
“However, it is disappointing to see that the Government has decided that the income from the transfer of digital assets will be taxed at 30 per cent — which seems to be too high, given that the NFTs, cryptocurrencies and digital assets space is already booming and has immense potential for the economy in the near future,” Malviya said.
Rakesh Kaul, CEO, Clix Capital said, “The announcement of a digital rupee using block chain is exciting per se, but one needs to wait and watch whether there will be any specific benefits for this asset class. But the 30% tax on any income from the transfer of digital assets can act as a dampener on efforts to create a virtual digital economy.”
