BENGALURU: In a major boost to crypto players, Finance Minister Nirmala Sitharaman on Tuesday announced that 30% tax will be levied on any income from the transfer of any virtual digital asset. This includes cryptocurrencies to non-fungible tokens (NFTs).
Crypto players welcome this move, as 30% tax is the first step towards regularisation. For a few months now, they have been demanding clarity on taxes and they say that this taxation is a step in the right direction. The finance minister also proposed to provide an additional 1% TDS (tax deducted at source) on payment made for the transfer of virtual digital assets.
Also, in case of gifts in the form of virtual assets, the same will be taxed in the hands of the recipient. Sumit Gupta, Co-founder and CEO, CoinDCX, says that this Budget gives much-needed clarity and confidence to the crypto industry.
“The biggest highlight of this Budget is the open flood gates to job opportunities in Web3. 30% tax on income clearly defines the stance of the government about digital assets and that they are legal,” says Siddharth Menon, COO, WazirX.
“So, all those talented entrepreneurs, engineers, economists, editorial, etc., who wanted to be part of the Web3 industry now have clarity from the government,” Menon added. In the past, many candidates did not join the crypto exchange because of uncertainty from the government, adds Menon.
Though this announcement clearly means that cryptocurrencies will not be banned in the country, some crypto players are also quite concerned about the proposed high tax-30% and that it will hit volumes. They say that such high TDS will be a burden for those investors who tend to do transactions for low profit.
“We await the details on what is a taxable event and what is the threshold for 1% TDS deduction. We do hope that the government will give exchanges and other businesses a certain time period to enable the tech behind TDS deduction and bookkeeping,” says Vikram Subburaj, CEO, Giottus Crypto Exchange.
Since the Budget clearly said that loss from transfer of virtual digital assets cannot be set off against any other income, Subburaj says that offsetting and carry forwarding losses have worked well in other countries.
Also, various crypto players said since virtual digital assets are now taxable, this will open banks and other institutions to partner with crypto exchanges and open India to a web3 future. Meanwhile, prices of the popular crypto tokens including Bitcoin, ETH and WRX, did not have any negative impact on exchanges.