30% tax on cryptocurrencies and NFTs income: All you need to know

Ground Report | New Delhi: Tax on cryptocurrencies in India; India on Tuesday announced plans to launch a digital currency by next year and tax cryptocurrencies and NFTs as the country moves closer to recognizing cryptocurrencies as legal tender in the world's second-largest internet market.

Tax on cryptocurrencies in India

Income from the transfer of any virtual assets will be taxed at 30%, the nation's finance minister, Nirmala Sitharaman, said on Tuesday. To capture the details of all those crypto transactions, she also proposed a 1% tax deduction at source on payments made related to the purchase of virtual assets.

“No deduction shall be allowed with respect to any expense or allowance in computing said income, except the cost of acquisition. Also, the loss from the transfer of digital assets cannot be offset by any other income,” she said in one of New Delhi’s most notable technology- and business-focused federal budgets. "It is also proposed that the gift of a virtual digital asset be taxed by the recipient."

"Any income from virtual digital assets is taxable at 30%; there will be no deduction with the exception of cost of acquisition; TDS applicable beyond a specified monetary threshold; virtual currency donation taxable in the hands of the recipient," it said Sithraman.

In short, Sitharaman proposed a flat 30% tax on digital asset earnings, regardless of short or long-term holdings. In case of losses, these cannot be offset against other income.

This implies that if you hold cryptocurrencies, the income derived from such investment will be taxed at 30 percent. Any profit generated through cryptocurrency trading would be taxed at 30%, including gifts and the transfer of virtual assets from one wallet to another owned by different people.

Investors trading cryptocurrencies are now required to report profits or losses that cannot be offset by any other type of income. The government has set a flat rate of 30% to ensure that all investors pay a percentage of their profits to the government in the form of taxes, explains Abhinav Soomaney, crypto and forensic expert as well as CEO of Cryptotax.

Some other notable announcements:

75 Digital Banking Units

• Railways will develop efficient logistics for small farmers and enterprises. The 'One Station, One Product' implementation will help in the local product supply chain.

• Inclusive development is the priority of the government, which includes farmers of paddy, kharif and rabi crops. Under this, 1,000 LMT of paddy is expected to be procured. This will benefit more than one crore farmers.

• In order to make digital banking accessible to every citizen, 75 digital banking units will be started in 75 districts of the country.

• 60,000 houses in rural and urban areas will be identified as beneficiaries of PM Awas Yojana. The construction of 80 lakh houses will be completed for the beneficiaries of PM Awas Yojana in 2022-23.

• An additional allocation of Rs 19,500 crore will be made to achieve the target of 280 GW of solar capacity by 2030.

60 lakh jobs under Make in India

• 16 lakh jobs will be given under self-reliant India. 60 lakh jobs will come under Make in India.

• The economy has been strengthened by PM Gati Shakti. Infrastructure facilities will be increased for 100 years.

• The scheme will be launched in PPP model to provide digital and hi-tech services to the farmers. Emphasis will be given on zero budget farming and natural farming, modern agriculture, value addition and management.

• The pace of our vaccination campaign in the midst of the Corona crisis has helped a lot. There is a very good response in 14 sectors to the incentive schemes related to production.

• We have simplified the tax system further. We are introducing a new updated return where people can file the updated return within two years of filing the IT return.

• The government is committed towards Minimum Government and Maximum Governance. With the repeal of 1,486 union laws, Ease of Doing Business 2.0 will be launched. We will follow the idea of ​​trust based government.

• The skilling program will be revamped. For skilling, upskilling and reskilling of youth, Digital Desh e-portal will be launched.

• To provide supplementary education in regional languages ​​for classes 1-12, the number of 'One Class One TV Channels' will be increased from 12 to 200 TV channels.

• Chemical free natural farming will be promoted across the country with focus on farmers' land in 5 km wide corridors along the banks of the Ganges.

• During the next three years, 400 new generation Vande Bharat trains with better efficiency will be introduced. In the next three years, 100 PM Gatishakti Cargo Terminals will be developed.

• 60,000 crore has been allocated in the year 2022-23 for the Har Ghar, Nal Se Jal Yojana.

• In Rabi 2022-23, 1208 metric tonnes of wheat and paddy will be procured from 163 lakh farmers. The year 2023 has been declared as the year of coarse grains.

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