Bitcoin, Ethereum, and other cryptocurrencies have been the talk of the town. While cryptocurrencies are a great way to make money, they also come with some tax hassles. This post will cover the various cryptocurrency income taxation rules under the Budget 2022 Expectations.
At present, there is no specific provision in the Income Tax law addressing the taxation of cryptocurrency earnings. Tax experts expect the Budget to provide clarity on the taxation of crypto earnings.
Cryptocurrency Income Tax Rules (Budget 2022 Expectations): Even though crypto assets are unregulated, popularity has skyrocketed. The Government plans to introduce a cryptocurrency bill during the upcoming Budget Session of the Parliament. Traders, investors, and industry insiders are expecting an official tax policy framework to be included in the fiscal year 2022 budget.
There is no specific provision in the Income Tax law regarding cryptocurrency taxation, which is expected to be clarified in the Budget.
Under general provisions, capital gains are taxed. Some professionals, however, think it should be taxed under other sources of income since no specific heading has been defined. If the volume of transactions is high, it may also be considered a business income. Abhishek Soni, co-founder and CEO of Tax2Win shared that due to this lack of clarity, they expected this budget would bring in specific provisions for cryptocurrency taxation. According to Archit Gupta, CEO and founder of Clear, the Budget needs to clarify how cryptocurrencies are taxed.
The upcoming Union Budget 2022 should provide clarity on cryptocurrency taxation in the wake of the cryptocurrency bill. There are a number of issues related to crypto taxation, including its classification, tax rates, and TDS/TCS implications. purchase of cryptocurrencies, etc. which we are hoping will be clarified during the budget session,” Archit Gupta said.
Cryptocurrency Tax: Contentious issues
Deloitte India reports that there are several open questions regarding the taxability of cryptocurrency in India because there are no specific provisions in the Indian tax law. Such as:
- What should be the method of calculating the fair market value, costs, taxable income, and reporting requirements for crypto transactions?
“It is recommended that a specialised regime for taxation of cryptocurrency be introduced covering, interalia, provisions dealing with classification of cryptocurrencies (capital asset vs. financial instrument vs. commodity), situations in which cryptocurrencies are taxable in India, head of income for taxation, expenses that can be claimed, income tax rate, and reporting requirements,” Deloitte India said in its pre-budget expectations.
What crypto industry expects
It remains to be seen whether the government will clarify taxation aspects for cryptocurrencies in the upcoming budget or whether it will do so separately in a separate cryptocurrency law. Everyone interested or involved in cryptocurrencies is looking for clarity on taxation.
“Besides regulatory clarity, we expect better clarity from the government on crypto taxation. India has been witnessing an economic recovery despite the COVID waves. A regulatory clarity will give the crypto sector a boost, accelerate its growth and potential to contribute to our $5 Trillion economy vision,” said Nischal Shetty, of cryptocurrency exchange WazirX.
With regard to the crypto landscape, Wazirx expect the Union Budget to provide a fine-tuned clarification. Nischal Shetty noted that even if the legal implementation was still some ways off, any initiative announced in the Budget would at the very least open a direct line of communication about crypto classification as an asset class, its taxation policies, and the huge opportunities available in this globally emerging industry. “Besides encouraging institutional investment in this area, it would also create new job opportunities in underserved markets,” he said.
The CEO and founder of Bitbns, Gaurav Dahake, also stated, “We are hoping for clarity within the next few months regarding how crypto will be regulated. There has been much discussion but there has been no concrete result to date.”
He believes that 2021 would be the most significant year for the crypto industry in India and for the crypto community as a whole in terms of how things develop.
In an interview with Coinstore, a Singapore-based crypto exchange that recently began operations in India, Charles Tan said:“In order to expand faster, we look forward to positive announcements for foreign digital asset exchanges which will enable them to become a part of India’s growth story. Hopefully, there will be more business-friendly rules when it comes to registering crypto companies in India and getting regulatory clearance so that foreign exchanges can operate with confidence and serve the growing user base in India. Clarity on crypto regulation and taxation will be really helpful in creating a long-term business plan for our India operations.”
NFTically Founder and CEO Toshendra Sharma shared, as the market for digital assets and services had grown rapidly within the country, they were hopeful that the government would bring clarity to the regulations surrounding blockchain technology. Policies that come into play will make it easier for Indian businesses to do business and make the country a leader in the future.”
“For several years now, the crypto industry has been surrounded by speculation. With the upcoming budget, we expect the government to introduce the regulations that the community has been waiting for. Cashaa Founder & CEO Kumar Gaurav says the new framework will facilitate positive growth. Foreign investors will also infuse funds into the country through this framework.
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