11/01/23

INDIA: Experts Call For Clarity On Taxation Of Cryptos, Digital Currencies Ahead Of Budget 2023-24.

As published on outlookindia.com, Tuesday 10 January, 2023.

As crypto currencies and other digital assets gain traction across the world experts at Deloitte have called for clarity and certainty on taxation of cryptocurrencies and digital assets ahead of Union Budget 2023-24 which will be presented by Union Finance Minister Nirmala Sitharaman on February 1.

In a report titled Pre-Budget Expectations, Deloitte said that the present scheme of taxation of crypto assets seems to be straightforward and similar to taxation on betting or gambling activities.

The current taxation on crypto which was announced in the Budget last year imposed 30 per cent tax, besides a fee and a cess. Also, a one per cent tax is deducted at source (TDS) under section 194S of the I-T Act starting July 1 on payments exceeding Rs 10,000 for virtual digital currencies to keep track of the money trail.

“Recognising the importance of addressing various tax compliance risks with respect to crypto-assets, the OECD has also introduced the Crypto-Asset Reporting Framework (CARF), designed to ensure the collection and automatic exchange of information on transactions in crypto-assets. To align with global reporting, avoid litigation, and provide certainty to investors, clarifications/deliberations inter alia on open issues (such as characterisation, legislation, valuation, withholding tax applicability on non-residents, wide scope) would ensure that key players do not evade tax in India,” Deloitte said.

Last month, Minister of State for Finance (MoS) Pankaj Chaudhary informed Rajya Sabha that government collected Rs 60.46 crore in tax from transactions in virtual digital assets since July this year.

Post insertion of Section 194S in the Income-tax Act, 1961, "318 direct tax challans" were received, amounting to Rs 60.46 crore, the MoS said.