Investing in crypto? Transactions done before April 2022 won't be tax-free. Read here

The Central Board of Direct Taxes (CBDT) on Thursday clarified that crypto transactions done before April this year will not be tax free as was believed by some. 

CBDT Chairman JB Mohapatra today said that the the taxability of the crypto-currency is certain for this financial year too. “Crypto investors should know that the transactions done before April 2022 will not be tax-free,” Mohapatra was quoted as saying by ANI. 

Finance Minister Nirmala Sithraman on Tuesday proposed 30% tax on transactions in cryptocurrencies. During There has been a phenomenal increase in transactions in virtual digital assets and the magnitude and frequency of these transactions have 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 per cent,” she said.

The finance minister also said that no deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.

Further, loss from transfer of virtual digital asset cannot be set off against any other income and gift of virtual digital asset is also proposed to be taxed in the hands of the recipient.

Finance Secretary TV Somanathan on Wednesday said cryptocurrencies like Bitcoin or Ethereum will never become a legal tender in India. He said only the digital rupee issued by the Reserve Bank of India (RBI) would be the legal tender. 

“Digital rupee will be backed by RBI which will never default. Money will be of RBI but the nature will be digital. The digital rupee issued by RBI will be the legal tender. We can purchase non-digital assets with the digital rupee like we purchase an ice cream or other things using our wallet or payments through UPI platform,” he said while speaking to ANI.

“Rest all are not legal tender, will not, will never become legal tender. Bitcoin, Ethereum, or any picture of Actor become NFT will never become a legal tender,” he added.

Somanathan said that crypto assets are assets whose value is determined between two people, you can buy gold, diamond, and crypto assets, but that value will not have authorisation by the government.

People investing in private crypto should understand that it is not having the authorisation of the government. There is not any guarantee that your investments will be successful or not, one may lose money and the government is not responsible for this, he said.

With inputs from ANI

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