ICAI Releases handbook on Taxation of Virtual Digital Assets
Dynamics of the income-tax law, compel sharpening of skill sets in the arena for effective performance. Addressing counselling and compliance responsibilities of clients and the other stakeholders, importance of updating professional knowledge, need not be overemphasized. ICAI publications afford professionals, worthwhile insight and guidance in this behalf.
A cryptocurrency or coin is a digital currency (it does not exist in physical form like paper money) designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. The first decentralized cryptocurrency was Bitcoin, which first released as open-source software in 2009.
As the members are well aware that Virtual digital assets have gained tremendous popularity in recent times and the volumes of trading in such digital assets has increased substantially. In view of the trading volume of Virtual digital assets in India, Our Hon’ble Finance Minister Smt. Nirmala Sitharaman while presenting the Union Budget 2022, stated that magnitude and frequency of these transactions had made it imperative to provide for a specific tax regime and announced a scheme for taxation of virtual digital assets, such as cryptocurrencies and non-fungible tokens (NFTs).
In order to make available various aspects of law of taxation of Virtual Digital Assets and to provide guidance to the members, an effort has been made by the Direct Taxes Committee through this handbook. It covers the law and procedures relating to what is Virtual Digital Assets, how it’s different from digital currency, Legislative Intent and Legal Provisions and taxation provision of Virtual Digital Assets. This new publication would enable the members to better understand the aforesaid new provisions.
Under the aforesaid circumstances, we at the Direct Taxes Committee thought it fit to bring out this brief publication namely “Handbook on Virtual Digital Assets” as a handy tool to assist the fraternity to make proper compliance of the new provisions and procedures in more objective manner and with consciousness towards related documentations. Of course, members are expected to update themselves continuously.