Taxing cryptocurrencies does not give them legal status in the country, finance minister Nirmala
Sitharaman clarified in the Parliament. It’s the country’s sovereign right to tax cryptocurrency
transactions. However, any official stance on regulation will only come once the ongoing
consultations are completed, finance minister said.
Crypto Tax: What it Means
“The proposed section 115BBH seeks to provide that where the total income of an assessee
includes any income from transfer of any virtual digital asset, the income tax payable shall be
the aggregate of the amount of income-tax calculated on income of transfer of any virtual
digital asset at the rate of 30 per cent and the amount of income-tax with which the assessee
would have been chargeable had the total income of the assessee been reduced by the aggregate of
the income from transfer of virtual digital asset,” Budget 2022 Memorandum said.
The newly proposed cryptocurrency tax will be applicable from Assessment Year 2023-24. That
means all your income from crypto transactions in FY 2022-23 will be taxed at the rate of 30 per
cent. Investors have to pay tax according to the existing taxation rules for FY 2021-22.
What are Virtual Digital Assets?
Explaining what would come under the virtual digital assets, Micky Irons, chief marketing
officer, DeSpace Protocol said, “In simple words, it basically means 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, and hence
aimed at specifically taxing cryptocurrencies."
Crypto Legality in India: What Experts Say
“As the central government has announced straightaway a 30 per cent tax on any kind of transfer
in cryptos, investors are taking it as the first positive step towards crypto regulation in the
country. It is now clear from the Budget announcement that there is not going to be any ban on
cryptos and this may encourage more investors into the industry than deter them," Micky Irons
said.