The government has proposed 39 amendments to the Tax Law 2022, including changes to the structure of cryptocurrencies; Penalty provisions regarding the disclosure of import-export information and the status of past revenues claiming to reduce the prohibited product and additional costs.
The debate on the law is scheduled to take place in the Lok Sabha on Friday.
There is no internal asset regulation in cryptocurrency
Since its introduction, cryptocurrency experts have debated whether the loss of one virtual digital asset would be allowed to be regulated against the income of another virtual asset. For example, can the loss from Bitcoin be compared to the gain from NFT?
Last week, the government made it clear that there would be no internal asset configuration in the tax regime for virtual digital assets.
Through Fiscal Bill 2022, a new section for virtual digital asset taxation is proposed to be introduced. Effective April 1, every proceeds from a virtual digital asset transfer will be taxed at 30%.
The article also states that any losses incurred during the transfer of virtual assets will not be allowed to be calculated against any income. “Other” Income tax law
The amendment now removes the word “Other” State that no damages during the transfer will be allowed against any provision of the law.
The amendment marks the continuation of the government’s more conservative stance on cryptocurrency taxation, said Gori Puri, a partner at Shardol Amarchand Mangaldas and company.
The amendment also clarifies that the transfer of virtual digital assets will include any type of virtual digital asset, regardless of whether it is an investment or not.
The meaning of the word “transfer” was not clear because the term definition applies to capital assets, said Sandeep Jhonjwala, co-founder, Nangia Anderson LLP.
The amendment now seeks to clear the ambiguity by stating that the term “transfer” will also include digital assets. The previous definition was applicable to capital assets and now the same meaning will be applied to virtual assets.
Penalty terms for publishing import-export data have been removed
The 2022 Central Budget also introduces penalty conditions for disclosure of any information provided to customs by the exporter / importer under the 1962 Customs Act.
The proposed section carries a penalty of up to six months imprisonment and a fine of up to Rs 50,000 or both for publishing information in case of violation of the law.
The government has amended the article to say that the punishment under this article will include only imprisonment.
Previous application for prohibition of single / surcharge discount clarified
The Tax Act, 2022 had proposed reversal of the discount for surcharge or cess.
The move took effect after the 2005-06 assessment and raised suspicions about past claims and the potential risk of fines.
The proposed amendment now defines any surcharge or cess deficit that was claimed and allowed to be treated as reported income for the same last year. And a 50% fine will be imposed.
It appears that the remaining claims in the appeal may not be subject to fines as they have not yet been granted to the taxpayers, Jonjanwala explained.
However, there is a way out.
The proposed amendment would allow the taxpayer to submit an application and recalculate the total income for the year when the surcharge or cess deficit was claimed.
Once the tax rate is applicable after the excise duty and surcharge is deducted, the assessor’s income will no longer be considered as under-reported, the proposed amendment said.