Infrastructure costs incurred in the mining of cryptocurrencies or any virtual digital assets would not be allowed as a deduction under the income tax act, said the Minister of State for FinancePankaj 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 percent 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 percent 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. According to the minister, no deduction for any expenditure (other than the cost of acquisition) or allowance is allowed when calculating the revenue from the transfer of VDA. "VDA is also proposed to be defined in the (Finance) Bill.
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 incurred in the mining of VDA (eg crypto assets) will not be recognised as cost of acquisition as the same will be in the nature of capital expenditure," which is not deductible under the Internal Revenue Code.
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