Express News Service
BENGALURU: The Central Board of Direct Taxes (CBDT) has excluded gift cards, vouchers, mileage points, reward points and loyalty cards from the definition of virtual digital assets (VDA) such as cryptocurrencies and non-fungible tokens(NFTs).
This means, tax applicable on VDAs will not be applicable for these products. “Mileage points, reward points or loyalty card, being a record given without direct monetary consideration under an award, reward, benefit, loyalty, incentive, rebate or promotional program that may be used or redeemed only to obtain goods or services or a discount on goods or services,” CBDT said.
Apart from these, subscriptions to websites or platforms or applications will also be excluded from VDAs. “The Central government specifies NFTs as virtual digital assets which shall not include a token whose transfer results in transfer of ownership of underlying tangible asset which is legally enforceable,” said Amit Maheshwari, Tax Partner, AKM Global, a tax and consulting firm.
Meanwhile, from July 1, 1% Tax deducted at source (TDS) on VDA transactions have come into effect. Crypto exchanges have said that they are complying with the new directive on 1% TDS. Crypto trading platform WazirX said processes are in place to collect TDS for relevant transactions. The TDS collected needs to be paid to the Income Tax Department in INR. For this, any TDS collected in the form of crypto has to be converted to Indian rupee.
Rajagopal Menon, Vice President at WazirX said, “For ease of conversion and to reduce price slippage, in crypto to crypto transactions, the TDS for both sides would be deducted in the quote (or primary) crypto asset.” WazirX markets have 4 quote assets- INR, USDT, BTC, and WRX. Many crypto platforms have been saying that 1% TDS on transactions would be highly detrimental to the crypto industry. “The government too will be at a loss as they will lose out on the possibility to earn massive tax revenue due to overall decreased transaction volumes on crypto platforms,” said Amajot Malhotra, country head, Bitay.
TDS on VDAs come into effect from July 1
From July 1, 1% tax deducted at source (TDS) on VDA transactions have come into effect. Crypto exchanges say that they are complying with the directive. Crypto trading platform WazirX said processes are in place to collect TDS for relevant transactions