Finance Minister Nirmala Sitharaman on Tuesday proposed to tax digital and virtual assets like cryptocurrencies and NFTs.
While presenting the Union Budget 2022-23 in the Parliament, she announced that any income from the transfer of any digital virtual asset shall be taxed at the rate of 30 percent.
She stated that the magnitude and frequency of transactions in virtual digital assets have increased phenomenally.
She said further that the scheme would not allow any deduction in respect of any expenditure or allowance while computing such income except the cost of acquisition.
The minister also added that the loss from the transfer of virtual digital assets cannot be set off against any other income.
She said that in order to capture the transaction details, the Government would also make a provision to provide for TDS on payment made in relation to transfer of virtual digital assets at the rate of 1 percent of such consideration above a monetary threshold.
She also proposed to tax the gift of a virtual digital asset in the hands of the recipient.
Some key highlights from her budget speech on taxation issues include the following.
Permission to file updated returns
Finance Minister Nirmala Sitharaman said that the Government proposes to permit taxpayers to file an updated return on payment of additional tax within two years from the end of the relevant assessment year.
She said this would give taxpayers an opportunity to correct any omissions or mistakes incorrectly estimating their income for tax payment.
She pointed out that currently if the department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication, the new proposal would repose trust in the taxpayer.
“It is an affirmative step in the direction of voluntary tax compliance”, she added.
Tax Relief to Persons with Disability
Finance Minister Nirmala Sitharaman announced that the Government proposes to allow the payment of annuity and lump sum amount to the differently-abled dependent during the lifetime of parents and guardians, on subscribers attaining the age of sixty years.
She pointed out that there could be situations where differently-abled dependants may need payment of annuity or lump sum amount even during the lifetime of their parents or guardians,
The law currently provides for a deduction to the parent or guardian when they take an insurance scheme for the differently-abled person only if the lump-sum payment or annuity is available to the differently-abled person on the death of the subscriber.
Parity between State and Union Government Employees
The Government proposes to increase the tax deduction limit to 14 percent from 10 percent on employer’s contribution to the NPS account of State Government employees.
The Finance minister stated that this is intended to enhance the social security benefits of the State government employees and bring them at par with the union government employees.
Litigation Management
Finance Minister Nirmala Sitharaman stated that a lot of time and resources are consumed in the filing of appeals that involve identical issues.
The Government would make a provision that if a question of law in the case of an assessee is identical to a question of law which is pending in appeal before the jurisdictional High Court or the Supreme Court, in any case, the filing of further appeal in the case of this assessee by the department shall be deferred till such question of law is decided by the jurisdictional High Court or the Supreme Court.
This is in order to take forward the Government’s policy of sound litigation management and reduce repeated litigation between taxpayers and the department, the finance minister stated.
Finally, the Finance minister thanked the taxpayers of the country who have contributed immensely and strengthened the hands of the Government in helping their fellow citizens in the hour of need.
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