Correct Answer : Option (C) - 30%
If you have invested in cryptocurrencies, be ready to pay tax on the gains from 1st April 2022 under the new scheme for Taxation of Virtual Digital Assets.
During the budget speech on February 1, Finance Minister Nirmala Sitharaman proposed a flat 30% capital gains tax on all virtual digital assets, a 1% Tax Deductible at Source (TDS) on all transactions involving virtual digital assets ( VDAs), no offsetting of losses, and taxation of crypto gifts. VDAs include cryptocurrency as well as non- fungible tokens (NFTs).
The chairman of Central Board of Direct Taxes, JB Mohapatra, in a statement on March 17, 2022, confirmed that the proposed 30% taxation on income from cryptocurrencies and other virtual assets will come into effect from April 1, 2022.
TDS at the rate of 1% shall be deducted on transactions in such digital asset classes from July 1.
How your crypto assets will be taxed :
From 1st April 2022, a 30(%) percent I-T plus cess and surcharges will be levied in the same manner as it treats winnings from speculative transactions.
One per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The 1 per cent TDS will have to be deducted on the purchase value of the transaction. 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.
You may sell cryptocurrency at a profit or loss but TDS at the rate of 1 percent would occur irrespective. However, one can claim refund of TDS done on transaction involving loss.
"The flat 30% tax rate may not prove to be the best outcome since it does not consider aspects of long and short-term gains calculated in line with the holding period of VDAs. Gifting VDAs may not become mainstream due to this tax regime. The challenge in the trade of VDAs is with respect to determining the identity of payee and thus, VDA transactions demand more transparency, " said Rishi Anand, Partner at DSK Legal..Source : Times of India