Cryptocurrency bills are in the nascent stages of development and not many countries have explicitly said anything about the taxation or legal implications so far, with India being an exception.
Authorities are working towards understanding how they will be taxed while using cryptocurrency as a medium to transfer value.
The confusion is understandable given that cryptocurrencies were originally designed to avoid taxes altogether, but now it would appear their creators have been forced into creating some tax-mitigating means due to increased global scrutiny on bitcoin’s usage and trading activity worldwide.
Investors and stakeholders in India are awaiting the government’s legislation regarding cryptocurrencies while there is clarity regarding crypto tax.
Investors and stakeholders in India have been debating the cryptocurrency tax and proposed regulation bill for a while now. Despite the Finance Minister’s clarification on crypto taxation, the government is yet to introduce legislation regulating cryptocurrencies.
According to a PTI report, the government proposed tightening taxation rules for cryptocurrencies by disallowing losses from cryptocurrencies to be set off against gains from other virtual assets.
FINANCE BILL, 2022
Reports say that the Ministry of Finance has proposed to remove the word ‘other’ from the section on the set off of losses from gains from virtual digital assets in the amendments circulated to the Lok Sabha members.
Consequently, losses resulting from the transfer of virtual digital assets (VDAs) will not be able to be offset against income resulting from the transfer of another VDA.
VIRTUAL DIGITAL ASSETS
Over the past couple of years, non-fungible tokens (NFTs) have gained a lot of traction as currencies.
VDAs are codes or numbers or tokens that can be transferred, stored or traded electronically, according to the Finance Bill, 2022.
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