FM proposed tax on virtual assets
Finance Minister Nirmala Sitharaman on Tuesday proposed a 30% tax on income from virtual digital assets, such as cryptocurrencies and nonfungible tokens (NFTs).
Noting that there had been a phenomenal increase in transactions in virtual digital assets, she said the magnitude and frequency of these transactions had 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%,” Ms. Sitharaman said in her Budget speech.
The Minister added there would be no deduction allowed while computing such income except the cost of acquisition.
“The government has set a fixed 30% rate to ensure all investors pay a percentage of their gains to the government in the form of taxes,” said Abhinav Soomaney, CEO, Cryptotax Pvt. Ltd.
“Most commonly used cryptocurrency tax calculation methods include highest in, first out (HIFO); last in, first out; and highest in, first out,” he said.
“The HIFO approach is most beneficial for investors who would like to use their highest cost basis coins,” Mr. Soomaney added.