SRINAGAR: Sheikh Zayed could not hide his happiness when Finance Minister Nirmala Sitharaman announced a 30 percent tax on cryptocurrencies.
A crypto freak, he has been investing in digital currency for the last several years. For Zayed, bringing cryptocurrencies under a tax regime means formalizing the trade like the stock market.
Earlier domiciles sword was hanging over the cryptocurrencies as the government was mulling a ban due to security reasons.
“This is good news. Now it has been regulated. People were not investing freely fearing it may be banned. But now everyone will invest. It is like a share market now. People have to pay tax as they do on income and other goods and services. Crypto is a legal asset now,” he said.
Zayed said the value of Crypto will increase because of the new taxation. “Though tax is on a higher side, it is manageable. On the brighter side, the Crypto value will increase,” he said.
Presenting the budget, Finance Minister Nirmala Sitharaman said the magnitude and frequency of these (Crypto) transactions have made it imperative to provide for a specific tax regime.
“Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 percent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition. Further, loss from the transfer of virtual digital assets cannot be set off against any other income,” she said.
Investors said new taxation has instilled confidence among people to pump money into cryptocurrencies. “It was being shown on account books as income from other sources. People were hesitant to reveal the source of money when investing. Investing in Crypto was neither legal nor illegal. People were confused. There was no clarity. Now trading in Crypto has been formalized and people can invest whatever amount they want,” said Mashoor Ali Wani, an investor.
Mashoor said only withdrawals will attract tax. “You will have to pay tax on withdrawals only. There will be no limit on investment. People will be free to invest and nobody will question,” he said.
Zahoor Hamdani, another investor, said they welcome the government decision but the tax slab is on the higher side. “This time, youth are attracted to Crypto. New taxation will instill confidence among investors. But the tax should be reduced. Thirty percent is on a higher side,” he said.
In order to capture the transaction details, Sitharaman also proposed to provide for TDS on payment made in relation to the transfer of virtual digital assets at the rate of 1 percent of such consideration above a monetary threshold. “Gift of virtual digital assets is also proposed to be taxed in the hands of the recipient,” the Finance Minister said.