Finance Minister Nirmala Sitharaman, in her Budget 2022 speech, announced a 30 per cent tax on income from virtual digital assets.
She further clarified that no deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition.
Additionally, she also proposed a TDS on payment made in relation to the transfer of virtual digital assets at 1 per cent above a monetary threshold.
Additionally, if a virtual digital asset investor incurs losses during the transaction, it can’t be set off against any other income. The gifting of virtual digital assets has also been proposed to be taxed in the hands of the recipient.
In the explanatory memorandum of the Finance Bill, the government stated, “To define the term “virtual digital asset”, a new clause (47A) is proposed to be inserted to section 2 of the Act.