At a time when trading volumes have dropped considerably, experts say the new tax amendments on virtual digital assets will further confine the growth of the industry and lead to more investors switching to foreign exchanges to avoid the taxes
Last year during the Budget speech, Finance Minister Nirmala Sitharaman introduced crypto taxation for the first time by bringing private cryptocurrencies under virtual digital assets (VDAs). This year, however, there was no mention about crypto during the Budget speech on February 1. But some new developments were later discovered in the fine print, which indicated a change in tax deducted at source (TDS) rules that affects VDAs.
A 30 percent tax plus applicable surcharge and four percent cess was announced to be levied on profits made from crypto trading last year. Also, losses made on any particular cryptocurrencies cannot be offset against profits made on other cryptocurrencies, and one percent TDS under section 194S of the Income Tax Act was levied on crypto transactions above Rs10,000.