Infrastructure costs spent in the mining of cryptocurrencies or any virtual digital assets would not be allowed as a deduction under the income tax statute, said the Minister of State for Finance Pankaj Chaudhary,
Chaudhary stated in a written reply to the Lok Sabha that the government will issue a definition of virtual digital assets (VDA) with the intention of levying a 30% tax on income derived from the transfer of such assets. He stated that bitcoins are currently uncontrolled in India.
The levy of income tax on crypto assets has been clarified in the 2022-23 Budget. From April 1, a 30% I-T, plus cess and surcharges, will be applied to such transactions in the same way that it is applied to horse racing winnings or other speculative transactions.
The minister clarifies, no deduction for any expenditure (other than the cost of acquisition) or allowance is allowed when calculating the revenue from the transfer of VDA. "In addition, the (Finance) Bill proposes to define VDA." If any virtual asset meets the proposed definition, it will be treated as a VDA for the purposes of the Act, and the Act's other provisions will apply accordingly," he stated.
He went on to say that "infrastructure costs paid in the mining of VDA (eg crypto assets) will not be considered as cost of acquisition because the same will be in the nature of capital expenditure," which is not deductible under the I-T Act.
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