Cryptocurrency: In the upcoming budget, the government may consider imposing TDS/TCS on the sale and purchase of cryptocurrencies above a certain threshold, and such transactions should be brought within the scope of specific transactions for the purpose of reporting to income tax authorities, according to Tax Department official Arvind Srivatsan. Leader and Partner, Nangia Anderson LLP.
In addition, a higher tax rate of 30% should be imposed on income from the sale of cryptocurrencies, comparable to profits from game shows, lotteries, puzzles, etc., he told PTI.
Srivats stated on 1 February, when discussing what the upcoming Union Budget 2022-23 may have in store for India’s crypto owners, that the country currently has the highest number of crypto owners in the world at 10.07 crore, and according to a report, it will have the highest number of Indians in cryptocurrencies by 2030. The expected level of investments is $241 million.
“It was anticipated that a measure to regulate cryptocurrencies would be introduced during the winter session of Congress. However, it was not introduced, and it is possible that the government will consider it during the budget session. Unless the government bans Indians. We expect the government to implement a regressive tax system for cryptocurrencies if they are traded,” he noted.
Taking into account the size of the market, the quantity involved, and the risk associated with cryptocurrencies, he suggested that the taxation of cryptocurrencies could be modified to include tax deducted at source (TDS) and tax collected at source (TDS). (TCS) exceeds a threshold that will allow the government to obtain “investor footprints.”
Both acquisitions and sales of cryptocurrencies must be reported on the Statement of Financial Transactions (SFT).
According to him, trading firms already disclose the same information for the sale and purchase of shares and mutual fund units.
The Income Tax Act defines SFT as or Reportable Account in order to keep account of high-value transactions performed by taxpayers.
This aids the tax authorities in collecting information on certain defined high-value transactions conducted by any individual throughout the year.
Financial institutions, corporations, and stock exchange intermediaries are subject to SFT reporting. Srivatsan stated that income from the sale of cryptocurrencies, such as rewards from lotteries, game shows, and puzzles, should be taxed at a 30 percent rate.
The bill is a response to concerns that such currencies are purportedly being used to deceive investors.
Separately, the government is considering changes to the Income Tax Act to bring cryptocurrencies under the tax net, as well as potential budget amendments for 2022-23.