After imposing a 30% tax on Cryptocurrency earnings, the Indian government dropped another shocker for the investors. Answering the queries, the Ministry of Finance clarified that loss incurred from trading in one type of crypto token cannot be set off from the profit of another coin. Ministry also elucidates cost of building mining infrastructure won’t be eligible to be deducted as the cost of acquisition.
India is still in between in the massive adoption of Cryptocurrency. However, Youngsters have been a major proportion of this evolution. Meanwhile, the Indian government is taking one step at a time to protect investors from fraud and illegal activities. Indian Finance Ministry has replied to all queries related to doubts over Cryptocurrency raised by the opposition during the parliament session.
Pankaj Chaudhary, Minister of State for Finance notified that ‘Currently, Cryptocurrencies are unregulated in India.’
Can losses incur in one virtual digital asset can be set off against the gains arising from another virtual digital asset?
The minister replied, As per the provisions of the proposed section 115BBH to the Income-tax Act, 1961 (the Act), loss from the transfer of virtual digital asset (VDA) will not be allowed to be set off against the income arising from transfer of another VDA.
To the query, Whether infrastructure costs incurred in mining digital assets are to be treated as a cost of acquisition?
As per the proposed section, any income from transfer of VDA shall be taxed at the rate of 30%. Further, while computing the income from transfer of VDA, no deduction in respect of any expenditure (other than cost of acquisition) or allowance is allowed.
As per the proposed provisions of section 115BBH, infrastructure costs incurred in mining of VDA (eg. crypto assets) will not be treated as cost of acquisition as the same will be in the nature of capital expenditure which is not allowable as a deduction as per the provisions of the Act, he added
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