The Hon. Finance Minister Mrs Nirmala Sitharaman has announced radical changes to the virtual asset class in the Budget 2022. The government has now formally referred to digital assets, including cryptocurrency holdings, as “virtual digital assets.” These include all forms of cryptocurrency, including Bitcoin, Ethereum, and other digital assets like Non-fungible tokens (NFTs).
These are the considerations that any cryptocurrency investor should bear in mind, even though there are still a lot of discussions that the Indian Government needs to have with the Indian populace regarding the regulations it will set for “Virtual Digital Assets,” in accordance with the Budget 2022 session:
- At the end of each fiscal year, income from the transfer of virtual digital assets like cryptocurrency and NFTs will be subject to a 30% tax.
- When declaring revenue from the transfer of digital assets, there will be no deductions permitted outside the cost of purchase.
- Digital asset losses cannot be offset by any other income.
- The recipient of a digital asset gift will be subject to crypto tax. It is not possible to offset losses from one virtual digital currency against gains from another. This list of recommendations should also include the 1% TDS point, which was stated in Budget 2022.
What are VDAs?
Let’s quickly review what these crypto-assets are before delving into the taxation and ongoing government discussion surrounding virtual digital assets also known as crypto assets. Blockchain technology is used to run the decentralized digital assets known as cryptocurrencies, such as Bitcoin and Ethereum. If we go back a few years, the cryptocurrency industry has always been fraught with controversy ever since Satoshi Nakamoto, a mysterious figure, released the Bitcoin Whitepaper to the public in 2009.
Since then, the decentralized aspect of the cryptocurrency field has been explored, and as of today, there are more than 18,000 cryptocurrencies, also known as altcoins, accessible, according to Investopedia.
HOW IS INDIA’S 30% CRYPTO TAX CALCULATED?
There are no distinctions between short-term and long-term gains when applying the flat income tax rate to retail investors, traders, or anybody moving cryptocurrency assets in a given fiscal year. Any gains derived through the transfer of virtual assets will be subject to a 30% tax rate, which can be clearly known from crypto portfolio tracking. No of the type of income, such as company or investment income, or the length of the holding term, the 30% cryptocurrency tax rate will always apply.
Due to macroeconomic uncertainty, the cryptocurrency market has been facing a persistently pessimistic tone that has severely reduced the wealth of many hedge funds, crypto exchanges, and investors.
According to CoinMarketCap data, the market cap of all cryptocurrencies is currently $910.65 billion, a decrease of 1.62% from the previous day. Volume-wise, the whole cryptocurrency market is currently down 5.62% from the day before to $49.89 billion transactions. Bitcoin is once again under $21,000.
The price of bitcoin is currently $20,460.81, down by 2.11%. Over the course of the day, its dominance fell by 0.24% to 42.81%. Ether is currently trading 2.18% less than at $1,144.89. In terms of market share, Bitcoin is the market leader among cryptocurrencies, followed by Ethereum. All of this is at your fingertips with Binocs where you can balance and manage your investments at an ease of sitting at home.