Income Tax Notification CG-DL-E-09082023-247974: What You Need to Know
The income tax CG-DL-E-09082023-247974 is a new circular issued by the Central Government on August 9, 2023. The circular provides guidance on the taxation of digital assets, such as crypto currencies and non-fungible tokens (NFTs).
The circular clarifies that digital assets are considered “virtual digital assets” for the purposes of income tax law. This means that any income derived from the transfer of digital assets will be taxable as “capital gains”.
The circular also sets out the rates of taxation for capital gains from digital assets. Short-term capital gains (i.e., gains arising from the transfer of digital assets held for less than 36 months) will be taxed at a flat rate of 30%. Long-term capital gains (i.e., gains arising from the transfer of digital assets held for more than 36 months) will be taxed at a rate of 20%, plus cess and surcharge.
The circular also provides guidance on the taxation of gifts of digital assets. Gifts of digital assets will be taxed in the hands of the recipient, at the same rates as capital gains.
The circular is a significant development in the taxation of digital assets in India. It provides much-needed clarity on the tax treatment of these assets and will help to ensure that taxpayers are compliant with the law.
Here are some key takeaways from the circular:
- Digital assets are considered “virtual digital assets” for the purposes of income tax law.
- Any income derived from the transfer of digital assets will be taxable as “capital gains”.
- Short-term capital gains (i.e., gains arising from the transfer of digital assets held for less than 36 months) will be taxed at a flat rate of 30%.
- Long-term capital gains (i.e., gains arising from the transfer of digital assets held for more than 36 months) will be taxed at a rate of 20%, plus cess and surcharge.
- Gifts of digital assets will be taxed in the hands of the recipient, at the same rates as capital gains.
