Budget 2022 and Your Money: What the FM's announcements mean for investors

moneycontrol.com:

Finance Minister Nirmala Sitharaman on Tuesday did not hand out any major tax benefits for individual tax-payers during her Budget announcements.

However, for investors in cryptocurrencies, it turned out to be an eventful Budget. The finance minister’s announcement on tax on virtual or digital assets offers some clarity on the way forward for such investment avenues that many Indians, especially millennials, have taken fancy to.

This apart, there are some proposals will have a direct bearing on your finances next financial year. Here are key changes that Budget 2022 is set to usher in.

Cryptocurrencies now in the tax net

In Budget 2022, finance minister Nirmala Sitharaman provided clarity on how digital assets will be taxed. This means that gains from cryptocurrencies will now be taxed. At present, there are no explicit provisions dealing with taxation of cryptocurrencies under the income-tax act, 1961, given that the Cryptocurrency Bill is pending a debate in the Parliament. In the budget speech, finance minister proposed that income from transfer of any digital asset (this is likely to include cryptocurrencies and non-fungible tokens or NFTs) will be taxed at 30 percent. No expenditure of any expenditure, except cost of purchase, will be allowed. “No set off of loss from sale of virtual digital capital asset against income under other provisions of the Income-Tax Act will be allowed and such loss shall not be allowed to be carried forward to subsequent assessment years either,” says Mayur Shah, Tax Partner, EY India.

Also note, that income earned from virtual assets (including cryptocurrencies) will be taxed from April 1, 2021 onwards. This means gains made in the current financial year, too, is proposed to being taxed.