Union Budget 2022: Cryptocurrency – the word, asset, market has gained immense popularity in India over the past few years. With over 10 million cryptocurrency investors, India is now home to the largest number of cryptocurrency owners in the world, according to research published by WazirX and Nascom. Indian investment in cryptocurrency could reach $241 million by 2030, according to the report. Considering the huge size of the cryptocurrency market and the risk associated with digital tokens, there should be an appropriate framework to regularize the asset in India. While the long-awaited Cryptocurrency Bill will not be presented in the current budget session of Parliament, investors expect the Ministry of Finance to present a suitable tax policy framework for cryptocurrency. currency during the 2022 Union budget.
If the government does not ban Indians from trading cryptocurrencies, we expect the government to introduce a regressive tax regime for cryptocurrencies, said Naveen Wadhwa, DGM, Taxmann.
How cryptocurrency will be taxed: 2022 budget to provide insight
Currently, there is a specific provision under the Income Tax Act to levy a tax on cryptocurrency income. Income from crypto assets is taxed as capital gains, in accordance with the general provision. However, some experts want the sale and purchase of cryptocurrencies above the threshold to be
under the TDS/TCS provisions. This will help the government to have an investor footprint in the unregulated digital token market.
Some experts have estimated that a higher tax rate of 30% should be levied on income from the sale of cryptocurrency, similar to winnings from lottery, game shows, jigsaw puzzles, etc.
“As the government awaits the Cryptocurrency Bill, much needed clarification is expected on its taxation in the upcoming Union Budget 2022. There are various concerns regarding the taxation of cryptocurrency, its classification, rates applicable taxation, TDS/TCS and GST implications on the sale and purchase of cryptocurrencies, etc. which we hope will be clarified during the budget session,” said Archit Gupta, Founder and CEO of Clear.
The lack of specific provisions for the taxation of cryptocurrency in India is causing uncertainty among investors – whether crypto transactions should be disclosed and offered for tax, Deloitte India pointed out. Cryptocurrency investors need clarity on what the method of calculating fair market value, costs, taxable income, and reporting requirements should be.
“It is recommended that a specialized cryptocurrency taxation regime be introduced covering, among other things, provisions dealing with the classification of cryptocurrencies (capital vs. financial instrument vs. commodity), situations in which cryptocurrencies are taxable in India, Head of Revenue for taxation, claimable expenses, income tax rate and reporting requirements,” Deloitte India said in its pre-budget expectations.
Some experts believed that the sale and purchase of cryptocurrencies should be included in the scope of reporting in the statement of financial transactions. Trading companies already make similar reports on the sale and purchase of stocks and units of mutual funds.
“We expect the Union budget to present honed clarity on the crypto landscape. While legal implementation still seems a long way off, any initiative announced in the budget would at least open a direct line of conversation about crypto’s classification as an asset class, its tax policies, and blue ocean opportunities. available in this emerging segment globally. This would not only encourage institutional investment in the space, but also open employment opportunities in underserved markets,” said Nischal Shetty of cryptocurrency exchange WazirX.
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