The government on Thursday, March 24, 2022, proposed tightening norms for taxation of cryptocurrencies by disallowing set-off any losses with gains from other Virtual Digital Assets (VDAs). This was part of the 39 amendments proposed by the government to the Finance Bill, 2022.
Finance Minister Nirmala Sitharaman is expected to introduce an amendment on Friday, clarifying that no tax deduction or set-off will be available in place of mining cost of crypto assets and other VDAs or losses from their transfer.
The government will also move an amendment to say that all transfers of virtual digital assets will be covered under the proposed 30 per cent tax, whether they are capital assets or not. It will also move an amendment to explicitly state that only the proposed rate of tax deducted at source on virtual digital assets transactions would be applicable and not rate applicable under any other provision.
The Union Budget 2022-23 had proposed to tax crypto assets at the rate of 30 per cent, with effect from April 1. It also proposed 1 per cent TDS on payment of virtual assets exceeding Rs 10,000 in a year and taxation of such gifts in the hands of recipients. TDS provision will be applicable from July 1. The Finance Bill is expected to be brought up for discussion and passage in the Lok Sabha on Friday.
Following the amendment, the Minister of State for Finance Pankaj Chaudhary clarified that the loss arising from the sale of one crypto will not be set off against the gain from the sale of another crypto. Further, while computing income from such transfer, no deduction is allowed in respect of any expenditure (other than the cost of acquisition) or allowance.
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