Crypto tax: Govt may explore set-off relief to digital currency traders: Report

cnbctv18.com:

Amid requests from the cryptocurrency industry to reconsider some aspects of the tax on virtual digital asset transactions, the government may explore allowing traders of digital currency a limited set-off of one year's losses from trade against profits made in the same financial year, according to The Economic Times.At present, such provisions are permitted in listed and unlisted stock transactions. The current provisions allow the stock trader to carry forward the loss in one financial year by 4-8 years, depending on the nature of the trade.

This helps in lowering the tax outgo if the gains are part of 'capital gain' or 'business income.'Also read: After 30% crypto tax, Centre mulling GST on mining of digital tokensIn stock trade, losses made from 'speculative' trades such as those arising from intraday and high-frequency transactions are permitted to be set off from speculative profits over the next four years. However, the trader cannot set off long-term losses carried forward against short-term gains made during a year.As per the recent discussions held between senior tax officials and tax practitioners, crypto traders may not get the same leverage as a stock market trader.

However, tax authorities may explore introducing changes in the Finance Bill to provide some degree of relief for cryptocurrency losses.Also read: Budget 2022: 5 key takeaways for crypto businesses and investorsThe government has taken the provisions related to set-offs for crypto tax from Section 115 BBE of the Income Tax Act which deals with undisclosed income and taxability. The matter is expected to be reviewed by the officials, the business daily said."It is for discussion whether we would stay with this or allow a set-off within a year," ET