According to Finance Minister of State Pankaj Chaudhary, the I-T Act does not permit the deduction of infrastructure costs incurred in the mining of cryptocurrencies or other virtual digital assets.
Minister of State for Finance Pankaj Chaudhary said on Monday that infrastructure costs incurred in the mining of cryptocurrencies or any virtual digital assets will not be allowed as a deduction under the Income Tax Act.
Government officials told the Lok Sabha in a written reply that they plan to define virtual digital assets (VDAs) and levy a 30% tax on the income generated by the transfer of these assets.
According to him, there is currently no regulation of cryptocurrencies in the country of India.
The levy of income tax on crypto assets has been clarified in the 2022-23 Budget.
Such transactions will be taxed at a rate of 30 percent I-T plus cess and surcharges from April 1, just like winnings from horse races or other speculative transactions.
To calculate income from the transfer of VDA, there is no allowance or deduction for any other expenditure or allowance.
“A definition of VDA is proposed in the (Finance) Bill. If a virtual asset meets the proposed definition,
it will be classified as a VDA under the Act and subject to the other provisions of that Act “he stated.
There is no I-T deduction for “infrastructure costs incurred in the mining of VDA (eg crypto assets)” because they are considered “capital expenditure,” he said.
As a result, losses incurred in the transfer of a VDA cannot be offset against the income generated by another VDA.
Additionally, a 1% TDS on payments for virtual currencies over 10,000 per year was proposed in the Budget 2022-23,
as was taxation of such gifts once they reached the recipient’s hands. Individuals and HUFs required to have their accounts audited under the I-T Act would be exempt from paying more than 50,000 in TDS per year.
As of July 1, 2022, the tax provisions related to 1% TDS will take effect, while the gains will be taxed on April 1.
It has not yet been made public that the government is working on legislation to regulate cryptocurrencies.