Finance Minister Nirmala Sitharaman on 11 February 2022 said the government has sovereign right to tax profit made from cryptocurrency transactions, and the decision on banning or not banning will be taken based on feedback from consultations.

What

  1. In her Budget speech on 1 February 2022, Sitharaman had said that only RBI-issued 'Digital Rupee' will be recognised as currency, and the government will levy a 30 per cent tax on gains made from any other private digital assets from 1 April 2022.
  2. The Budget 2022-23 has proposed a 1 percent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
  3. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.
  4. Also, no deduction in respect of any expenditure or allowance shall be allowed while computing income from transactions in such assets.
  5. It has also specified that losses from the transfer of virtual digital assets will not be allowed to be set off against any other income.
  6. The provisions related to 1 per cent TDS will come into effect from 1 July 2022, while the gains will be taxed effective 1 April 2022.