The Indian government has not only cracked down on crypto market players by imposing a 30% tax on cryptocurrency earnings but recently the administration has offered more surprises to crypto market players.
In response to inquiries, the Ministry of Finance clarified that losses incurred from trading in one type of token or cryptocurrency cannot be deducted from the profits of another token/cryptocurrency. The ministry also clarified that the cost of construction of mining infrastructure is not eligible to be deducted as acquisition cost.
India is currently still at the top of the charts in mass adoption in crypto. Young people have been a big part of contributing in this direction. Nevertheless, the Indian government has taken drastic measures at one time as a precaution to protect investors from fraud and illegal activities.
Pankaj Chaudhary, Minister of Finance informed that at the moment cryptocurrency is still not regulated in India. Regarding the imposition of tax, based on the provisions of section 115BBH proposed to the Income Tax Act, 1961, losses from cryptocurrency transfers will not be allowed to be deducted from income arising from other VDA transfers.
This section also states that any income from the transfer of VDA will be taxed at the rate of 30%. Regarding crypto miners, under the proposed section 115BBH, infrastructure costs incurred in VDA (cryptocurrency) mining will not be treated as acquisition costs as the same costs are in the form of unauthorized capital expenditure as deductions under the provisions of the Act.
