The Government on 21st March, 2022, has clarified that losses from one Crypto cannot be adjusted against gains from another.
“As per the provisions of the proposed section 115BBH to the Income-tax Act 1961 (the Act), loss from the transfer of VDA will not be allowed to be set off against the income arising from transfer of another VDA,” Union Minister of State for Finance said in the Lok Sabha.
Crypto investors, traders and experts are disappointed with the clarification as many fear this would lead to the death of emerging blockchain industry in India. As, simply, crypto investors and traders would have to pay flat 30% tax on income from virtual digital asset (VDA) while losses would not provide any tax benefit.
“While profits from crypto trading will be taxed at 30%, losses cannot be set off against other losses or be carried forward. This is something that is more depressing. Crypto is an asset class and an investment product which should be treated as other asset classes,” Neha Nagar, CEO & Founder, TaxationHelp.in, said.
As per Ashish Singhal, Co-founder & CEO, CoinSwitch, “This is detrimental for India’s crypto industry and the millions who have invested in this emerging asset class. We fear the lack of provision to offset losses will drive away users from KYC-compliant exchanges and platforms to the underground peer-to-peer grey market, which would defeat the purpose of the tax.”
Knowledge Source :
Government Working on Classification of Cryptocurrency Under GST