New Delhi: A new separate income tax (IT) column for making disclosures on gains made from cryptocurrencies is in the offing, as the government is coming up with a new plan for crypto users, said Revenue Secretary Tarun Bajaj.
Bajaj mentioned that from April 1, 2022, the government will charge a 30 per cent tax plus cess and surcharges on digital transactions in the same manner as it treats winnings from horse races or other speculative transactions.
Now, what does it mean for crypto users? What they can do? Let’s have a look.
According to revenue secretary, gains from cryptocurrencies were always taxable and what the Budget proposed is not a new tax but providing certainty over the issue. “Next year ITR form will show a separate column for crypto. Yes, you will have to disclose.”
This means, crypto users from the next fiscal year will have to disclose their proceeds from digital currencies as it now come under the perspective of income tax.
The 30 per cent plus applicable cesses and surcharge of 15 per cent on income above Rs 50 lakh will have to be paid on income from cryptocurrencies plus the income tax return form from next year will have a separate column to declare gains from crypto. The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.
Some investors are showing crypto gains as income and paying taxes, while some are not doing it. With TDS provision introduced, transaction information will reach tax department automatically, he said while adding that “The provision in the Finance Bill is related to taxation of virtual digital assets. It is to bring certainty in taxation of cryptocurrencies. It does not convey anything on its legality which would come out once the Bill is introduced in Parliament.”
Reacting to industry fears about the tax rates, the revenue secretary strongly backed the 30 per cent rate and said there was no reason to tax these assets lower than what anyone else pays on their income.
Citing an example, he said trading in the derivative is not considered as investment or capital gain but is treated as business income.
Recently, JB Mohapatra, chairman of Central Board of Direct Taxes (CBDT), has said the proposed 30 per cent tax on proceeds of digital assets will fetch a huge tax revenue as the turnover of the top 10 crypto exchanges in India is around Rs 1 lakh crore.
Finance Minister Nirmala Sitharaman has also announced India’s decision to introduce its own digital currency this year.
India’s crypto market grew 641 per cent in the year through June 2021, according to an October report by industry research firm Chainalysis.
A RBI-backed digital currency (CBDC) will start circulating in the next fiscal year to usher in cheaper, more efficient currency management.
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