to invest or not to invest?- the Indian crypto dilemma.

With the announcement of Union Budget 2022, the proposed Section 115 BBH in Budget gave away a significant progressive and futuristic outlook of the government with respect to cryptocurrency in the country.

The focus on digital innovation while promoting Blockchain technology touched upon the key points that are supposedly meant to help the industry create sustainable growth. The first step in that direction came with classification of cryptocurrency as virtual digital assets. As per the Finance Bill, the term virtual digital assets includes both cryptocurrency and non-fungible tokens(NFTs) .

The main question that arises is how does it impact a retail investor in crypto?

• Tax Deducted at Source will amount to 1% of the entire transaction amount.
• Any profits made from sale of cryptocurrency will be taxable at a flat rate of 30% w.e.f April 1, 2022.
• Loss incurred from digital asset holding can not be set off against any other income.
• The tax is on the basis of cumulative net gain on a transaction. For example, in case the profit from one cryptocurrency is ₹20000 and the loss is ₹6000, then the net taxable amount is ₹14000.
• The only deduction to be allowed is the cost of acquisition.