Breaking: Government To Give Big Update On Cryptocurrencies Through FAQs

If you invest in Cryptocurrency, then the government is going to give a big update on it soon. Actually, the government is working on FAQs i.e. frequently asked questions regarding taxation on cryptocurrencies. An official says that the FAQ will make things clear about levying Income Tax and GST on Virtual Digital Assets.

The draft of the set of FAQs is being prepared jointly by the Department of Economic Affairs (DEA), RBI and the Revenue Department. The Law Ministry will review it. The official said that the frequently asked questions regarding taxation on cryptocurrencies and virtual digital assets are being worked out. However, the FAQ has no legal validity. These are asked for information purpose. However, to ensure that there is no flaw in it, the opinion of the Law Ministry is being sought on this.

There will be clarity on taxation

The official said that the DEA, the revenue department and the central bank are working to ensure that there is clarity on taxation among people transacting cryptocurrencies and other digital currencies with the field tax office.

More discounts for special persons

Budget 2022-23 proposes to deduct one per cent TDS on payment of more than Rs 10,000 from virtual currency in a year, along with taxation on such gift takers. Under this, the limit of TDS for some special persons will be Rs 50000 per annum. These include individuals/ HUFs etc., for whom income tax audit of their accounts is required.

Is crypto a good or a service, will get clarity

Apart from this, the provision of one per cent TDS will be applicable from July 1, 2022, while tax on profit will be applicable from April 1, 2022. From the point of view of GST, it will be clear from the FAQ whether cryptocurrency is a good or a service. Currently, 18 per cent GST is levied on services provided by crypto exchanges.