In a significant move to bring cryptocurrencies and virtual assets into the tax scanner, the Cryptocurrency exchanges are reportedly readying their systems for the one per cent tax deducted at source that will kick in from next month.
As per reports, the Exchanges said they are awaiting more clarity from the government on the mechanism for collecting the tax and various aspects of the TDS. Concerns remain rife that investor sentiment, which is already muted, will be hit further once the tax comes into play on July 1.
In the last few weeks, the tax department is understood to have held a series of meetings with crypto exchanges on the roll out of the tax.
The Union Budget 2022-23 has proposed a taxation scheme for virtual digital assets which includes a one per cent TDS on payments made in relation to transfer of such assets.
As per the budget proposed by Union Finance Minister Ms. Nirmala Sitaraman, virtual digital assets have gained tremendous popularity in recent times and the volumes of trading in such digital assets have increased substantially. Further, a market is emerging where payment for the transfer of a virtual digital asset can be made through another such asset.
Accordingly, a new scheme to provide for taxation of such virtual digital assets has been proposed in the Bill. The proposed section 115BBH seeks to provide that where the total income of an assessee includes any income from transfer of any virtual digital asset, the income- tax payable shall be the aggregate of the amount of income-tax calculated on the income of transfer of any virtual digital asset at the rate of 30% and the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the aggregate of the income from transfer of virtual digital asset.
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