The government is expected to issue detailed clarification over virtual digital asset (VDA) this week as reported by economic times. Employer will have to pay 30% tax on VDA as Cryptocurrencies offer their employee as compensation or otherwise.
The tax will be levied on the difference between the acquisition cost of the good and the transfer price to the worker. In the case of employees, the transfer price would be considered as the acquisition cost. The clarification is expected to clearly describe the principles for determining the acquisition cost of VDAs. “Rules are being worked out… These will be published soon,” a government official said.
The government is examining whether to consider the first-in, first-out method for demat values, weighted average, or last-in, first-out format for determining acquisition cost.
Further, the clarification could also provide some relief in the payment schedule of tax deducted at source (TDS). “The clarification would address some of the concerns raised by the industry,” another official said.
In the budget for fiscal year 23 presented in February, the government incorporated the VDAs into the tax network. However, the crypto industry has petitioned the government for a relaxation in TDS conditions that require payment to be made before the release of consideration in crypto or other VDA transactions.