In the next Union Budget 2022, the government may propose taxing the sale and purchase of cryptocurrencies beyond a specific threshold via tax deducted at source (TDS)/tax collected at source (TCS), according to Aravind Srivatsan, tax leader and partner at Nangia Andersen LLP.
He proposed placing them in the definition of a “specified transaction” to require reporting to the IRS. In addition, he claimed that cryptocurrency trading gains should be subject to a higher tax rate.
Srivatsan proposes that, like the tax on lottery, game shows, puzzles, and other similar types of win, a 30% tax be levied on bitcoin sales earnings. Srivatsan stated again to PTI in an interview regarding the Budget 2022-23 that India has 10.07 crore crypto owners, making it the country with the most crypto owners in the world.
He cited a survey that predicted Indians would invest an additional $241 million (Rs 17,893.88 crore) in the cryptocurrency sector by the year 2030. He believes that the new budget that will be announced in India on February 1 would have significant implications for the country’s cryptocurrency industry.
Government Expected to Introduce Regressive Tax Regime in Budget Session
It was anticipated that cryptocurrency regulation legislation will be introduced during Parliament’s Winter Session. The measure was not introduced, although it is possible that it may be discussed during the upcoming Budget Session. Srivatsan warned that a regressive tax regime for cryptocurrencies is possible if the government does not outlaw cryptocurrency trading by Indian citizens.
He continued by saying that the amount at stake in the market, in addition to the risk, might cause significant shifts in the current arrangement.
He predicted that the government may receive the “footprints of the investors” if the Budget included adjustments to the taxation of cryptocurrencies, such as putting them within the laws of tax deducted at source (TDS) and tax collected at source (TCS) over a threshold level. Furthermore, he said that the buying and selling of cryptocurrencies should be required to be reported on the SFT.
India’s Cryptocurrency Bill Set to Debut in Budget Session
The market expert’s comments were made in anticipation of the introduction of a bill to regulate cryptocurrencies and official digital currencies.
The law, it has been reported, will finally be introduced during the Budget session of Parliament starting on January 31. The Union Budget of 2022 may include significant modifications to the income tax code that will subject cryptocurrency transactions to taxation.
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Conclusion
The upcoming Union Budget 2022 in India may propose taxing the sale and purchase of cryptocurrencies through tax deducted at source (TDS)/tax collected at source (TCS) beyond a specific threshold, as suggested by tax expert Aravind Srivatsan.
With the introduction of a bill to regulate cryptocurrencies and official digital currencies during the Budget session, significant implications are expected for the country’s cryptocurrency industry. The potential changes to the income tax code may subject cryptocurrency transactions to taxation, with a possible higher tax rate on trading gains.
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