The response to the queries regarding crypto raised by the opposition in the Indian Parliament, which were answered today, seems to have reminded people of the fact that they cannot offset losses incurred on transfer of a virtual digital asset (VDA) by income on another VDA.
The government clarified that as per the Budget 2022 proposals while computing any income generated from the transfer of the VDA, no expenditure deductions is allowed.
India’s Finance Minister, Nirmala Sitharaman announced on Feb 1, that income from cryptocurrencies and other digital assets will be taxed at an outrageous 30%, placing earnings from crypto and NFTs in India’s highest tax band.
The questions asked were regarding the status of cryptocurrency and were due by March 21. The answers also says that currently, cryptocurrencies are unregulated in India.
The founder of the WazirX exchange, Nishchal Shetty took to Twitter to express his disappointment regarding the answers given by the finance minister.
The minister of finance said that the losses incurred in one digital asset cannot be offset against income in another.
“As per the provisions of the proposed section 115BBH to the Income-tax Act, 1961 (the Act), loss from the transfer of virtual digital assets (VDA) will not be allowed to be set off against the income arising from transfer of another VDA.”
Although this does not come as news, since this rule was already stated when the 30% tax on the crypto industry was announced.
Nishcal, an active member of the crypto community, hoped that the government would change this.
The ministry also states that the cost of building mining infrastructure will not be deductible from the cost of acquisition.
“As per the proposed provisions of section 115BBH, infrastructure costs incurred in mining of VDA (eg. crypto assets) will not be treated as cost of acquisition as the same will be in the nature of capital expenditure which is not allowable as a deduction as per the provisions of the Act.”
The Indian Government is also trying to figure out the category of crypto income and assets under the GST law, so as to tax it accordingly.
