FinMin proposes amendments, seeks to tighten crypto tax standards

 

 

The government on Thursday proposed tightening taxation standards for cryptocurrencies by not allowing any losses to be offset with gains from other virtual digital assets.

 

In accordance with the amendments to the Finance Act 2022, circulated to Lok Sabha members, the ministry is proposing to remove the word “other” from the section on compensating losses from gains in virtual digital assets.

This means that the loss resulting from the transfer of a Virtual Digital Asset (VDA) will not be allowed to be offset against the income from another VDA transfer.

 

According to the Finance Act 2022, a VDA can be a token, number or token that can be transmitted, stored, or circulated electronically.

 

The VDAs will include mainstream cryptocurrencies and non-fungible tokens (NFTs) that have acquired a fad over the past two years.

 

It clarifies the 2022-23 budget regarding income tax on crypto assets. Effective April 1, a 30 percent IT tax plus fees and surcharges will be levied on such transactions in the same way as winnings from horse racing or other speculative transactions.

 

Also, while calculating income from VDA transfer, no deduction will be allowed in respect of any expenses (other than purchase cost) or provisions.

 

The 2022-23 budget also proposed 1 per cent tax refunds on payments towards virtual currencies in excess of Rs 10,000 per year and the taxation of such gifts in the hands of the recipient. The maximum TDS will be Rs 50,000 per year for specific persons, which includes individuals/HUFs who are required to have their accounts audited under the Information Technology Act.

 

Provisions regarding 1 percent of the total added tax will come into effect from July 1, 2022, while gains will be taxed from April 1.

 

Separately, the government is working on legislation to regulate cryptocurrency, but no draft has been released publicly yet.

 

The amendments to the Finance Law also propose to ease the penal provision related to the publication of export and import data.

 

The Finance Bill proposed the inclusion of a new Section 135AA in the Customs Act which states: If a person has published any information regarding the value, classification or quantity of goods brought in for export from India, or import into India, or details of the exporter or importer of such goods hereunder The law, unless required to do so by any law for the time being in force, shall be punishable by imprisonment for a term which may extend to six months, or a fine which may extend to fifty thousand rupees, or with both.

 

The amendments seek to abolish the six-month prison sentence and the penalty of 50,000 rupees.

 

The amendment now reads as follows: “If any person has made public any information, which has been provided to Customs by an exporter or importer under this Act, with respect to the value, classification or quantity of goods brought in for export from India, or import into India, together with with the identity of the persons involved or in such a manner as to result in the disclosure of such identity unless required to do so under any law for the time being in force, or with the specific authorization of such exporter or importer, shall be punished with imprisonment.”

(The title and image for this report may have been reformulated only by the Business Standard staff; the rest of the content is automatically generated from a shared feed.)

 

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