The Budget has proposed taxing virtual digital assets which give an impression that cryptocurrency will be made legal. However, Finance Minister Nirmala Sitharaman made it clear that it is not the case.
Most crypto marketplaces are calling the Budget announcements the first step towards the recognition of cryptocurrency as an emerging asset class. But several stakeholders, including crypto exchanges and legal eagles, are not too pleased with the high tax proposed and the absence of a loss set-off provision.
Here’s a quick look at the proposals:
▶️ 30% tax to be paid on returns from trading/investing in digital assets▶️ Any losses from the transfer of virtual digital assets can't be set off against any other income
▶️ 1% TDS on crypto transactions
▶️ No deduction allowed while computing income
▶️ Gifts of virtual assets also taxable
Here’s what key industry leaders had to say about the announcements.
Nithin Kamath, Co-founder & CEO, Zerodha
"The 30% tax without the option to set off losses against other tokens or deductions can lead to a drop in turnover... if crypto prices don't keep going up like the last 2 years, I don't see how the current adoption rates will hold up. Having said that, we'll be ready to offer crypto whenever SEBI gives its blessing 🙂."
Nischal Shetty, Founder & CEO, WazirX
"Till now, the biggest concern was that crypto could be banned any day... We also hope this development removes any ambiguity for banks, and they can provide financial services to the crypto industry."
Purushottam Anand, Founder, Crypto Legal
The Budget proposes that any loss from the transfer of virtual digital assets cannot be set off against any other income. “This isolates virtual digital assets from other asset classes and increases the effective tax burden for investors. Introducing provision of 1% TDS will help in tracking of transaction details and increase revenue collection."
Sathvik Vishwanath, Co-founder & CEO, Unocoin: India's Bitcoin & Crypto Exchange
"Income tax at 30% is still acceptable but 1% TDS makes it tricky for intra-day traders in India."
Keyur Patel, Co-Founder & chairman, GuardianLink and BeyondLife.club
"Virtual assets lumped into one by the government implies crypto and NFTs all under the same bucket… NFTs are nascent and such taxation will have to eventually adjust to growing the developing ecosystem. Worldwide NFTs are still classified as non-taxable assets, and it's imperative that the adjustment in understanding that crypto token is different than digital NFT is taken into consideration."
Sharat Chandra, Blockchain evangelist
"This move would force people to move to traditional modes of investment such as stocks, mutual funds because they are not subject to as high as 30% tax."
Anshul Dhir, COO & co-founder, EasyFi Network
"Higher taxation can be counter-productive but I am hopeful GOI has taken a temporary measure to contain unorganised trade and transfer of cryptocurrency."
What's your take on the announcements? Share in the comments below.
#blockchain #cryptocurrency #digital #digitalcurrency
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