The digital assets widely known as Cryptocurrency or NFTs are gaining recognition universally in spite of the controversies that have surrounded the topic since its inception.
India is also not lagging behind when it comes to investment in digital currency. The proposal to impose tax on crypto assets may lead to standardization of the investments in this class.
The Union budget for the upcoming fiscal year 2022-23 was presented by Finance minister – Nirmala Sitharaman with a proposal of 30 per cent tax on income from all kinds of crypto assets including cryptocurrencies and NFTs. As reported by Times of India group, the proposition is now all set to come into effect from April 1, 2022.
Apart from tax it has also been stated that the TDS (Tax deducted at Source) deductions at the rate of 1% will also be mandatory in all categories of digital assets from July 1, 2022. The deduction of TDS will help to track the transactions in crypto economy with ease.
Trading in these assets has multiplied manifold in India in past few years. However, India did not have a clear policy on either regulating or taxing such asset classes till now.
The CBDT chief, JB Mohapatra elaborated that as per estimates, it will give an annual jump of almost 48.4% in the tax collections.
“Today’s income tax collection of Rs 13.63 lakh crore is expected to rise further till March 30. Our gross & net collections in the last 5 years and in the history of the tax department is optimal. Our gross numbers have crossed Rs 15 lakh, which we could never touch earlier,” Mohapatra said.
He also appreciated the efforts of the I-T department on use and development of technology in the last 4-5 years, government reforms and buoyancy of the economy for contributing towards record collection of taxes. Moreover the government has been successful in collecting Rs 22,280 crore as security transaction tax (STT) in the fiscal year, which is much higher than the estimated value.
“The major reason for higher STT collection is the buoyancy in the stock market, with high volume of transactions,” Mohapatra added.
It is worth mentioning here that earlier the crypto investors were under a dilemma. They presented their income from crypto assets in different lights such as capital gains, income from business or other sources but with the new taxation rules, the process will be streamlined by bringing more transparency to the segment of virtual assets. While filing income tax returns, the income from digital or crypto assets (as defined in Section 247 A) will be treated under a special head with its own tax rate.
The government of India has further clarified that taxation rules should not be seen as the legalizing of the digital currency or assets.
