Times are changing and we are moving faster than ever before in terms of technology. One of the most recent developments in the domain of technology has been the introduction of Blockchain which has completely changed the picture around. Cryptocurrencies are now all around and people are making some real money out of them by investing and trading. India is not far behind. As a matter of fact, people starting to invest in the crypto market form a mind whopping 115 Million stats in the crypto segment in India. With such a gigantic population investing in the market, it was necessary for the Indian government to form new policies around cryptocurrencies to regulate the market to a certain extent.
How has the policy around incomes from cryptocurrencies changed in India since 2022?
On the Budget Presentation Day of India i.e. February 01, 2022, the hon’ble Finance Minister of India Mrs. Nirmal Sitharaman introduced a new sub-section of 115BBH called Virtual Digital Assets Taxation Scheme, that frames the initial, official, and stable stance of the Government of India on incomes made from selling and buying of these new forms of assets called Virtual Digital Assets (VDAs) also popularly known as the crypto tax. There were many more announcements regarding the policies including the plans to introduce a government-backed cryptocurrency called Central Bank Digital Currency (CBDC) by 2023.
What are the Virtual Digital Assets?
The crucial and important terminology of Virtual Digital Assets used in the proposal has been defined under Section 47A in order to bring it into effect.
The VDA definition as per the section is a digital representation of value exchanged with or without consideration, with the promise or representation that it has inherent value, or functions as a store of value or a unit of account, including its use in any financial transaction or investment, but not limited to investment scheme; and can be any information, code, ID, or token.
VDA definition also applies to the Non-Fungible Tokens (NFTs) or any other form of tokens with similar nature.
How are the Virtual Digital Assets going to be taxed?
Starting from April 01st, 2022, VDAs will be taxed at a flat slab of 30% on any profit made. Along with it, a TDS of 1% will be charged from the payee for any transaction greater than ₹50,000/-. This tds on crypto can be claimed back as the deduction while showing it as the cost of acquisition while paying the tax.
These rules are very new to everyone, and keeping a track of them can be a challenging task. Moreover, they are highly dynamic in nature and are changing very quickly. This is why software solutions like Binocs can help us to keep a track record of all our transactions related to the VDAs under one roof. Not just that, we can also create a simplified report of all the transactions and dashboard them using various insightful tools which gives us a better breakdown picture of our taxations.
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