Centre is considering modifications to the definition and ambit of virtual digital assets, with the Central Board of Direct Taxes (CBDT) tasked with preparing guidelines.
The idea, an official told Business Today TV, is to release these guidelines before July 1.
"This is an evolving discussion. We would like to ensure that virtual digital assets include any and every product that is introduced due to technological innovation. We may also exempt certain products," the official added.
However, it is unlikely that government may provide any relief on the 1 per cent tax-at-source applicable on cryptocurrency trades. The Centre is of the view that this tax provision will help in tracking and tracing the people who are in this business and making profits but are not filing it in their income tax returns.
Union Budget 2022-23 had announced taxation of virtual digital assets, which have been defined as to include any information or code or number or token generated through cryptographic means or otherwise.
Non-fungible tokens (NFTs) are also included within the definition and the government can also include any future virtual digital assets (VDA) under this classification.
Further, the Budget for the financial year 2022-2023 had also introduced a 30 per cent tax on all gains from sale of VDAs.
Recently, Economic Affairs Secretary Ajay Seth also informed that the government is in the final stages of preparing a consultation paper on cryptocurrencies with inputs from various stakeholders and institutions, including the World Bank and the IMF among others.
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