India could cover the crypto sector with the expected new broader definition of virtual digital assets that may emerge and also further refine the provision to tax these assets.

The government of India provisioned the tax system over the income of transaction or transfer of digital virtual assets, the percent of government tax would be 30 percent and such provision will come into effect from 1st April onward.

Highlights

• Government officials said that the definition is dynamic to covet any new product in this sector.
• The misuse of this system is the fear for the system, as per the experts.
• A new clause (47 A) has been proposed to insert in Law to define such virtual digital assets.
• Sanjay Sanghvi, partner of Khaitan & Co said the proposed definition is enough wide to cover cryptocurrency and any other such currencies.

Also Read: 'Digital Rupee' of India, says Nirmala Sitharaman in 2022-2023 'Union Budget'

Union Budget of 2022 to 2023 presented by the Financial Minister of India last week, the Budget has the topic of checking the crypto sector and its currencies. A senior official of government has also revealed about the crypto rules as.

“We want to ensure that the definition is dynamic enough to cover any new product that comes by due to technological changes….this sector is witnessing new products in a short time,” it was told to Economic Times.

He also said that the government is also capable to provide any specific provision for any removal of difficulty in the implementation of the budget provisions that will be raised.

The expert of the market has also commented over such provisions as any of the ways as peer-to-peer or wallet-to-wallet transactions may escape the tax.

Sudhir Kapadia, National Tax Leader said that the past is not the concern but clarity is needed on treatment for brought forward losses.

The constitutional provision is said to be proposed for the insertion as a new clause 47A that will define the virtual digital assets under law.

Tax experts also have commented over the matter as more clarity we needed as the provision of the digital assets comes under the Income Tax ACT, 1961 and it has many loose ends.

Where many are demanding more clarity over the law on the other hand the Partner of Khaitan and Co. Sanjay Sanghvi said the proposed definition of virtual digital assets

(VDA) was enough wide and comprehensive to cover cryptocurrencies including any other currencies or digital assets.

Also Read: Ahead of Budget Session of Parliament And Crypto Bill Timeline in India