#DigitalAssetBill
VDAs are also to be included in the Annual Information Statement (AIS) of taxpayers.
* Tax on Gifts: Cryptocurrency gifts exceeding ₹50,000 in total value are taxed as 'Income From Other Sources' at regular income tax slab rates.
* No Offsetting of Losses: Losses incurred from the transfer of VDAs cannot be offset against any other income, including gains from other digital assets. Only the cost of acquisition can be claimed as a deduction.
* Regulatory Ambiguity Regarding Exchanges and Trading: While taxation is defined, a comprehensive law specifically regulating cryptocurrency exchanges, trading platforms, and other aspects of the digital asset ecosystem is still awaited. The "Cryptocurrency and Regulation of Official Digital Currency Bill, 2021," which aimed to ban most private cryptocurrencies while allowing for a Central Bank Digital Currency (CBDC), has not yet been passed. This has led to a degree of uncertainty in the industry.
* Focus on Anti-Money Laundering (AML): Since March 2023, crypto assets have been brought under the purview of the Prevention of Money Laundering Act (PMLA). This requires cryptocurrency exchanges and service providers to comply with AML standards, including Know Your Customer (KYC) procedures and the reporting of suspicious transactions. The Financial Intelligence Unit India oversees enforcement.
* No Legal Tender Status: Cryptocurrencies, including Bitcoin, are not recognized as legal tender in India.
Review and Potential Impacts:
* Increased Revenue for the Government: The clear taxation framework is expected to generate significant revenue for the government from digital asset transactions.
* Greater Scrutiny and Compliance: The TDS and reporting requirements aim to bring more transparency to the digital asset market and ensure compliance with tax laws.
* Potential Impact on Trading Volumes: The high tax rate of 30% and the lack of provision for deducting expenses beyond the cost of acquisition might deter frequent traders and impact trading volumes.
