India approves “Crypto Tax” Law, despite criticism
- ByStartupStory | March 26, 2022
Amendments to the recently passed Finance Bill, 2022 has been approved by the parliament. The removal of the word ‘other’ from a section that relates to offsetting losses from crypto gains is included in it.
To introduce a new section that proposes taxation of virtual digital assets has been sought by the amendments. In addition, while computing the income from the transfer of these Virtual Digital Assets (VDAs), no deduction in respect of any expenditure except the cost of acquisition will now be allowed .
The centre issued a clarification that, essentially, banned offsetting loss in one crypto against another, came in days after the issue. With one trade body calling the policy ‘regressive’, the move drew terse reactions from the industry experts.
Quite a stir in the house was caused by the debate surrounding the crypto taxation. Crypto was being used to pay bribes and for money laundering, went on to be said by BJP MP, Nishikant Dubey.
To formulate legislation to prevent crypto’s ‘misuse’ for terror financing and drug smuggling, Congress’ Gaurav Gogoi also called on the government. He further added, “The government is giving mixed signals regarding crypto in India”, highlighting concerns about vagueness of policies.
A lot of confusion in the minds of crypto analysts has been created by the fineprint of Budget 2022. Any loss incurred during the transfer of the virtual asset would not be allowed to be set off against any income calculated under “other” provision of the income tax law as stated by the provision relating to 30% tax on VDAs.
Essentially, to say that any loss incurred during the transfer will not be allowed against any provision of the act, the amendment now removes the word “other”. The transfer of VDAs will include any VDA, whether it is a capital asset or not has also been clarified by the amendment.
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