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Home Technology Crytpocurrency

Cryptocurrency Bill To Come Soon: Govt Working On FAQs On Crypto Tax; Know Details – News18

cryptocurrency-bill-to-come-soon:-govt-working-on-faqs-on-crypto-tax;-know-details-–-news18
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According to the provisions of the Bill, from April 1 this year, a 30 per cent income tax plus cess and surcharges will be levied on transactions involving virtual digital assets

According to the provisions of the Bill, from April 1 this year, a 30 per cent income tax plus cess and surcharges will be levied on transactions involving virtual digital assets

These FAQ sheet will aim to give users a clarification in a nuanced way on the applicability of income tax and GST on virtual digital assets, as per a report

As the government prepares to roll out the Finance Bill that regulates all virtual digital assets, including cryptocurrencies, it is working on developing an FAQ on the taxation of the same. These FAQ sheet will aim to give users a clarification in a nuanced way on the applicability of income tax and GST on virtual digital assets, a report has said recently.

The set of Frequently Asked Questions (FAQ), which is being drafted by the Department of Economic Affairs (DEA), RBI and Revenue Department, would also be vetted by the law ministry, news agency PTI quoted an official, who has knowledge in this matter, as saying. FAQ on taxation of cryptocurrency and virtual digital assets is in works. Although FAQs are for information purposes and do not have legal sanctity, law ministry’s opinion is being sought to ensure that there is no loophole,” the person told PTI on the condition of anonymity.

The three departments — RBI, DEA and revenue department — are preparing these FAQs so as to make sure that there is full clarity on the taxation aspect mentioned in the bill. This goes for both the field tax offices as well as those who deal with cryptocurrencies and other virtual digital assets.

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This year’s Budget has focussed on introducing the new Finance Bill, which gives a much-awaited perspective on levy of income tax on crypto assets, or virtual digital assets. According to the provisions of the Bill, from April 1 this year, a 30 per cent income tax plus cess and surcharges will be levied on transactions involving virtual digital assets. This will be done in the same manner as the tax law treats winnings from horse races or other speculative transactions.

The Budget 2022-23 also proposed a 1 per cent TDS (tax deducted at source) on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act. The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.

From the GST perspective, the FAQ is likely to provide clarity on whether cryptocurrency is goods or service. Currently, 18 per cent Goods and Services Tax (GST) is levied only on service provided by crypto exchanges and it is categorised as financial services. The GST law does not clearly mention classification of cryptocurrency. In the absence of a law on regulating such virtual digital currencies, the classification has to take into account whether the legal framework categorises it as ‘actionable claim’.

An actionable claim is a claim which can be made by a creditor, for any type of debt other than a debt secured by mortgage of immovable property. Separately, the government is working on a legislation to regulate cryptocurrencies, but no draft has yet been released publicly.

(With PTI inputs)

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