Budget 2022: What Are Crypto Tax And Digital Currency?

New Delhi: Cryptocurrency has been the talking point for several months now. The number of people investing in crypto has been on the rise in India. Naturally, there were many who were eager to find out whether Finance minister Nirmala Sitharaman would ‘act’ on it in her Budget speech.

No regulations were introduced, but the Finance minister did make a couple of important announcements on Tuesday.

Noting that there has been a “phenomenal” increase in transactions of virtual digital assets, Sitharaman introduced a ‘crypto tax’.

She also mentioned that the Reserve Bank of India (RBI) will issue a digital currency in the next financial year.

CRYPTO TAX

* According to Sitharaman’s proposal, any income from digital asset transfers will be taxed at a rate of 30 per cent.

* No deductions and exemptions will be allowed on digital asset transaction.

* Loss from transfer of virtual digital asset cannot be set off against any other income.

* Gifts received in form of cryptocurrencies will also be taxed 30%, at the receiver’s end.

* To capture the transaction details, TDS on payment made in relation to transfer of virtual digital asset at the rate of 1% per cent above a monetary threshold.

DIGITAL CURRENCY

* A central bank digital currency (CBDC) will be launched 2022-23 onwards.

* RBI will launch CBDC backed by blockchain technology.

* Digital currency is legal tender in digital form, issued by the central bank. It is interchangeable with any other fiat currency issued in paper. No cryptocurrency is legal tender.