This is how cryptocurrency assets will be taxed from April 1 in India. 10 points

“The new 30% flat tax regime on crypto asset income from April 1, 2022 will dampen sentiments towards the new age asset class. However, we expect crypto investors to back their investment thesis and stay with the investment for longer periods," said Kunal Jagdale, Founder of BitsAir Exchange.

How cryptocurrency assets will be taxed from April 1 explained in 10 points

1) Tax @ 30% on Digital Assets: The profit on the sale of cryptocurrency would be taxed at a 30% tax rate. This taxation would certainly affect after-tax returns from cryptocurrency transactions. “Only the deduction of the consideration of the sale can be the 'acquisition cost of the cryptocurrency'. No other expenses will be allowed to be deducted. Because losses from other sources of income are not offset, it will be very difficult to have a profitable net trade in cryptocurrencies," said Sujit Bangar, Founder of Taxbuddy.com

2) If you have bought cryptocurrencies for $15k and sold it for $45k, your direct profit is $30k.

It would be recorded as follows:

Sales Consideration $45k

Less acquisition cost $15k

taxable profit $30k

Income Tax @30% $9k

3) TDS in cryptocurrency transactions: TDS @1% has been proposed for transactions involving cryptocurrencies. Sujit Bangar, founder of Taxbuddy.com, said that we can sell crypto at a profit or a loss, but TDS @ 1% will certainly happen. “We can claim a refund of TDS made in a transaction involving losses. Therefore, it would be recommended to file an income tax return if you have transacted in cryptocurrencies," added Sujit Bangar.

4) The threshold limit for TDS would $50,000 per year for specified persons, which includes individuals/HUF who are required to audit their accounts under the IT Act.

5) The provisions relating to the 1 percent TDS will take effect from July 1, 2022, while earnings will be effectively taxed on April 1.

6) Cryptocurrency received as a gift would be taxable: If you receive a gift in the form of cryptocurrency or any other virtual digital asset, it would be taxable as a gift after the 2022 budget.

7) Finance Minister Nirmala Sitharaman He said that the scheme would not allow any deduction in respect of any expense or allowance while computing such income except the cost of acquisition.

8) Last week, the Lok Sabha passed the Virtual Digital Assets (VDA) tax rules or “crypto taxes” that were proposed in Budget 2022-23 by passing the Finance Bill 2022.

9) Under the bill, section 115BBH deals with taxes on virtual digital assets, while clause (2)(b) prohibits offsetting a loss of crypto assets against income under "any other provision" of the Act of you. Also, the word "other" is removed for VDAs in the bill.

"The Finance Law 2022 has inserted a new section for the taxation of virtual digital assets. As of April 1, it is proposed to tax any income from the transfer of a virtual digital asset at a flat rate of 30%. It has been further clarified that any loss incurred during the transfer of a virtual asset may not be offset against any income (including profit from the sale of another virtual digital asset) under any provision of law. Only the cost of acquiring such an asset can be claimed in this calculation. This makes the government's position regarding the taxation of a virtual digital asset very clear. It would be interesting to see how value is attributed to a virtual digital asset exchange and how the gift of said asset is valued," said Sridhar R, Tax Partner, Grant Thornton Bharat.

10) This would mean that the loss from the transfer of Virtual Digital Assets (VDA) cannot be offset against the revenue from the transfer of another VDA.