30% tax on digital assets
1- Profits from cryptocurrencies will be taxed at the rate of 30 percent. This taxation will certainly affect the after-tax returns of cryptocurrency transactions.
2- If you bought crypto for 15 thousand and sold it for 45 thousand rupees, then your direct profit is 30 thousand rupees. It will be taxed as follows
Sales consideration- Rs.45 thousand
Low cost of acquisition – Rs 15 thousand
Taxable profit- 30 thousand
30% Income Tax- 9 thousand
3- 1 percent TDS has been proposed on transactions involving cryptocurrencies. That is, you can sell cryptocurrencies for profit or loss but TDS will be 1% for sure. Can claim refund of TDS on loss transactions. So if you are into cryptocurrency transactions then definitely fill in the income tax return.
4- The TDS limit will be Rs 50,000 per annum for specified persons. This includes individuals/HUFs who are required to get their accounts audited under the I-T Act.
5- The provisions relating to 1 per cent TDS will come into effect from July 1, 2022, while profits from cryptocurrencies will be taxed with effect from April 1.
Tax on crypto gifts
6- If you receive cryptocurrency or any other virtual digital asset as a gift, it will be liable to taxation as of post budget 2022 of the gift.
7- Finance Minister Nirmala Sitharaman said the scheme would not allow any deduction in respect of any expenditure or allowance while computing such income except the cost of acquisition.
8- Last week the Lok Sabha approved the taxation rules on Virtual Digital Assets (VDA) or “crypto tax”, which was proposed in Budget 2022-23 by approving the Finance Bill 2022.
Will not be able to set off the loss from other income
9- Section 115BBH under the Bill deals with tax on virtual digital assets (VDAs), while section (2)(b) sets off loss from crypto assets against income under “any other provision” of the IT Act. prohibits. Simultaneously, the word “others” for VDA has been omitted under the Bill.
10- This would mean that the loss arising from transfer of Virtual Digital Assets (VDA) would not be allowed to be set-off against the proceeds from the second VDA transfer.