Finance Minister Nirmala Sitharaman has proposed to tax gains from crypto assets or other digital assets at the rate of 30 per cent. This will happen in the Union Budget for the financial year 2022-23. This provision will be effective from 1st April, 2022. The budget paper does not provide any clarity regarding tax on cryptocurrency gains in the current financial years. This situation raises the question of whether gains on crypto after March 31, 2022 will be subject to tax.
There are also questions from experts regarding the cryptocurrency tax. Experts agree that gains on crypto before March 31, for lack of clarity, should be treated as long-term capital gains and taxed at 20%. Another view is that crypto profits should be subject to a 30% tax, as there is no explicit provision. The tax can be paid as per the new law.
Taxes are lower than first opinion –
Experts believe that profits earned before March 31, 2022 should be subject to lower tax rates. This is because profits earned on crypto will be subject to 30% tax from April 1, 2022. Amit Gupta, MD, SAG Information Tech, says the final taxation is not yet clear. It will explain how and why this can lead to more confusion than ever.
The proposed tax should also be paid during the current financial year
Others agree with the second opinion and say that the 30% tax proposed in the budget should be paid to avoid any legal dispute. Finmap co-founder Pramod Chandrayaan says the government will give necessary clarifications. He believes that long term investing is the best strategy to get good returns on the crypto market.
This volatile market is not good news for retail investors. The government is now going to impose 30% tax on crypto profits. It will be exciting to see how the tax is assessed in this situation.