Indian Government to Release Guidelines for Certain Crypto-Related Taxations: Report
While no major relief in tax rates is under consideration, exemption from crypto taxes may be granted to healthcare businesses using blockchain technology.
The Indian government is planning to issue a set of crypto-related rules before July 1 after making some improvements to the scope and definition of VDA for effective tax administration of virtual digital assets (VDA) The Central Board of Director Taxes (CBDT) has been asked to prepare the crypto-related rules.
“This is an evolving discussion. We would like to ensure that virtual digital assets include any and every product that is introduced due to technological innovation. We may also exempt certain products,” Business TV Today quoted an unnamed Finance Ministry official as saying.
The government is unlikely to reduce the 1% tax deduction at source (TDS) that applies to virtually all digital asset transfers. It thinks that the TDS will help trace and track people in the crypto trade who may be making profiles but are unwilling to show them in their income tax fillings.
CoinSwitch Kubar CEO Sumit Gupta had requested the government to bring down the TDS is the range of 0.1% to 0.05%
The 30% capital gains tax introduced through the Union Budget 2022-23 on profits from crypto transactions including those of NFTs is also unlikely to be reduced.
The Finance Ministry is not planning to offer exemptions aside from some exceptions that might include hospitals using blockchain technology.
Presenting digital assets as gifts on festivals and other special occasions is a growing trend. The new guidelines will provide for taxation on like gains.
While this week a top Finance Ministry revealed that a consultation paper is "fairly ready" after broad-ranging consultations with industry stakeholders and international agencies like the IMF and the World Bank. it will be put before the public for their comments and feedback within six months. Ajay Seth Economic Affairs Secretary in the Finance Ministry said:
IMF panel discussion and subsequent public events in the US during the 2022 Spring Meeting in April, Indian Finance Minister Nirmala Sitharaman said global crypto regulation as well India won't take a rushed decision.