Taxation on Income from Virtual Digital Assets i.e. Crypto/ Crypto Currency

Taxation on Income from Virtual Digital Assets i.e. Crypto/ Crypto Currency (Effective for the AY 2023-24) 

These are specific sections i.e., 2(47A), 115BBH, & 194S are proposed to be inserted under Income-tax Act by Finance bill 2022-23 to tackle the taxation issues relating to the transactions of Virtual Digital Assets (VDA) i.e., Crypto Currencies. Summary of the proposed taxation on the Crypto currencies are as under:

1)  Income: Any income from transfer of any VDA i.e., Crypto shall be taxed @ 30%.

2) Expenditure: No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.

3) Set off and carry forward of loss: No loss from transfer of virtual digital asset cannot be set off or carry forward and set off against any other income.

4) TDS (S.194S): TDS on payment made in relation to transfer of VDA @ 1% of such consideration above a monetary threshold i.e., 50,000/10,000.

i) Monetary limit: Monetary limit are as under:

(a) In case of Specified Person: Consideration payable not exceeds 50,000 during the financial year.

(b) In case of Other than Specified Person: Consideration payable not exceeds 10,000 during the financial year.

ii) Specified Person: Defined as under:

(a) Individual/FUF whose:

• • • Business- Total sale or turnover from the business carried by him not exceed by One Crore rupees
    • Profession– Gross receipt from the Profession carried by him not exceed by Fifty Lakhs rupees
    • Other than Business/Profession– No income under the head of ‘Profit and gain of business or profession’

during the financial year immediately preceding the financial year in which such VAD is transferred.

5) Gift of VDA: Gift of VDA is also proposed to be taxed in the hands of the recipient under the head of ‘Income from Other Sources’.

6) Property or Currency: It is also clarified that VDA i.e., Crypto Currencies are just Asset/Property and not the Indian/ Foreign Currency.

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Vijay Kumar Gupta | CA, CS, LLB, M.Com, LLM, B.Com, FAFD(ICAI) | Email: cavgindia@gmail.com