Lagatar24 Desk
New Delhi, Jan 17: Nangia Andersen LLP Tax Leader Aravind Srivatsan has said that the government may consider levying TDS/TCS on the sale and purchase of cryptocurrencies above a certain threshold in the upcoming Budget, and such transactions should be brought within the ambit of specified transactions for the purpose of reporting to income tax authorities.
In addition, he believes that the money derived from the sale of cryptocurrencies should be taxed at a higher rate of 30%, equivalent to lottery, game show, and puzzle profits.
Srivatsan, speaking to PTI about what the government’s Budget 2022-23 might hold for India’s crypto industry, said that India currently has the highest number of crypto owners in the world, at 10.07 crore, and that, according to a report, Indians’ cryptocurrency investment could reach USD 241 million by 2030.
“A bill was expected to be presented during Winter Session of Parliament to regulate cryptocurrencies. However, it was not introduced, and it is now expected that the government may take up this bill in the Budget Session. If the government does not prohibit Indians from dealing in cryptocurrencies, we expect that the government could introduce a regressive tax regime for cryptocurrencies,” he noted.
Given the size of the market, the amount at stake, and the risk associated with cryptocurrencies, he believes that certain changes in the taxation of cryptocurrencies, such as bringing them under the provisions of tax deducted at source (TDS) and tax collected at source (TCS) above a threshold limit, could help the government track down the “footprints of investors.”
Both the selling and the purchase of cryptocurrencies should be included in the Statement of Financial Transactions (SFT).
Both the selling and the purchase of cryptocurrencies should be included in the Statement of Financial Transactions (SFT).
According to him, trading companies already record the sale and acquisition of shares and mutual fund units in a similar way.
The Income-tax law has the notion of SFT or reportable account to keep track of high-value transactions carried out by the taxpayer.
This aids tax authorities in gathering information on certain high-value transactions that any person may engage in during the year.
SFT reporting applies to financial institutions, businesses, and stock market intermediaries. Srivatsan believes that, comparable to lottery, game show, and puzzle winners, the revenue derived from the sale of cryptocurrencies should be taxed at a higher rate of 30%.
The administration had planned to introduce a measure to regulate cryptocurrencies ahead of the winter session of Parliament, which ended on December 23. The law is being introduced in response to fears that such currencies are being used to deceive investors with false claims.
There is currently no rule or prohibition in place in the country regarding the usage of cryptocurrencies.
The ‘Cryptocurrency and Regulation of Official Digital Currency Bill’ is now likely to be submitted in Parliament during the Budget session, which starts on January 31.
Separately, the government is considering revisions to income tax legislation to include cryptocurrencies in the tax net, as well as some other reforms that might be included in the 2022-23 Budget.
