INSUBCONTINENT EXCLUSIVE:
The 2022-23 Budget has brought in clarity concerning the levy of income tax on crypto assets.New Delhi: Infrastructure cost incurred in the
mining of cryptocurrencies or any virtual digital assets will not be allowed as deduction under the Income Tax (I-T) Act, Minister of State
for Finance Pankaj Chaudhary said on Monday.In a written reply to the Lok Sabha, Chaudhary said the government will come out with a
definition of virtual digital assets (VDA) with a view to levy 30 per cent tax on income from the transfer of such assets.He said currently
cryptocurrencies are unregulated in India.The 2022-23 Budget has brought in clarity concerning the levy of income tax on crypto assets
From April 1, a 30 per cent I-T plus cess and surcharges, will be levied on such transactions in the same manner as it treats winnings from
horse races or other speculative transactions.The minister said while computing the income from transfer of VDA, no deduction in respect of
any expenditure (other than the cost of acquisition) or allowance is allowed."The (Finance) Bill also proposes to define VDA
If any asset falls within the proposed definition, such virtual asset will be considered as VDA for the purposes of the Act and other
provisions of the Act will apply accordingly," he said.He further said "infrastructure costs incurred in the mining of VDA (eg crypto
assets) will not be treated as cost of acquisition as the same will be in the nature of capital expenditure", which is not allowable as a
deduction under the I-T Act.Also, loss from the transfer of VDA will not be allowed to be set off against the income arising from the
transfer of another VDA.The Budget 2022-23 also proposed a 1 per cent TDS 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, which include individuals/HUFs who are required to 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.Separately, the government is working on legislation to regulate cryptocurrencies, but no draft has yet been
