The Centre proposes to impose one per cent Tax Deduction at Source (TDS) on payments for transfer of virtual digital assets above a "monetary threshold", Finance Minister Nirmala Sitharaman said in her Budget speech.
However, the threshold was not mentioned during the Budget speech.
The TDS was announced in order to capture the transaction details, Sitharaman added.
Besides TDS, gifting of virtual digital assets was also proposed to be taxed in the hands of the recipient.
In an apparent bid to disincentive virtual digital assets, the government on Tuesday announced a 30 per cent tax on any income from the transfer of virtual digital assets, and specified that no deductions and exemptions would be allowed.
Stressing that since there has been a phenomenal increase in transactions in virtual digital assets, Sitharaman, presenting the Budget 2022-23, said that the magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.
"No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of virtual digital assets cannot be set off against any other income," she said in her speech.
There are an estimated 15 to 20 million crypto investors but there is no clarity on the size of the Indian crypto market.