The government has clarified the tax policy for individuals. Indian investors cannot offset losses from crypto exchanges against profits from other platforms. You must pay taxes on any gains or losses in crypto assets. The new flat 30% taxation of income from crypto assets will help to bolster sentiment for this new asset class. We hope crypto investors will support their investment thesis and continue to invest for longer periods.
Indian exchanges, on the other hand are still waiting for clarity about the GST structure for crypto assets. We are optimistic that regulators will soon create an investor-friendly GST system.
A new bill on Virtual Crypto Assets is passed as the new fiscal year begins from 1 April 2022. The bill specifies a taxation system for Virtual Digital Assets ( VDA ). This includes flat 30% tax on profits and no slab deduction. Profit in one VDA is not able to be offset by loss in another VDA. All loss transactions will not be taken into consideration for tax calculations and only profits will be calculated. Any trading pair, whether fiat to cryptocurrency or crypto to crypto, will be considered taxable.
Gifting VDAs to others will be taxable, as well as trading and holding them. The tax bill also covers miners, as there is no deduction for expenses incurred in setting up mining. The purchase cost for mining transactions will be zero. Only the purchase/acquisition cost of VDA can be offset.
Conclusion
Profit will only be subject to a flat 30% tax without any adjustment for losses or other costs, if any. Only the cost of purchasing/acquiring a VDA will be taken into account. Taxation of Virtual Digital Assets is being implemented for Indian cryptocurency investors on April 1. The Union Budget 2022-22-23 clarified the taxation of crypto assets. Minister of Finance Nirmala Sitharaman stated that virtual assets will be subject to a 30% tax rate as part of the Union Budget 2022-23. To capture transaction details, minister Nirmala Sitharaman stated that the government would provide a Tax Deducted At Source (TDS), at a rate of 1% for consideration related to the transfer virtual digital assets.
