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<ul><li>The finance minister of India, Nirmala Sitharaman, will introduce the <keyword id="123776" type="General" weightage="20" keywordseo="finance-bill" source="Orion">Finance Bill</keyword> of 2022 in the Lok Sabha.</li><li>As per the latest Finance Bill, cryptocurrency gains will be taxed at 30%, which is the highest tax bracket.</li><li>The Finance Bill also proposes that the Central Bank Digital Currency “should also be regarded as bank notes”.</li></ul>The finance minister of India, Nirmala Sitharaman, will introduce the Finance Bill of 2022 in the Lok Sabha, or the lower house, on Thursday. The bill includes proposed rules on cryptocurrency taxation, among other things. Today, Sitharaman is scheduled to<a href="https://www.indiabudget.gov.in/doc/Finance_Bill.pdf"> discuss the Finance Bill of 2022 </a>and each of its amendments with the elected member of parliaments in the Lok Sabha. The members will then be voted upon. <cmsannotation type="cmsannotation" annotationid="wazirx" comment="wazirx" text="wazirx">wazirx</cmsannotation> As per the latest Finance Bill, cryptocurrency gains will be <a href="https://www.businessinsider.in/budget/news/from-cryptocurrencies-to-nfts-india-to-tax-all-virtual-digital-assets-at-30/articleshow/89268587.cms">taxed at 30%</a> – which is the highest tax bracket, and the <a href="https://www.incometaxindia.gov.in/pages/tools/income-tax-calculator.aspx">same rate as</a> lottery winnings. This would be applicable to all “virtual digital assets,” from Bitcoin to Non-Fungible Tokens (NFT) and related earnings. Besides this, the government of India has also proposed a 1% tax deducted at source (TDS) on payments made in relation to transfer of cryptocurrency. While speaking at India Global Forum earlier this month, Sitharaman had taken a jibe on the latest <keyword id="11252230" type="General" weightage="20" keywordseo="crypto-taxation" source="Orion">crypto taxation</keyword> as well. On being asked<a href="https://www.businessinsider.in/cryptocurrency/news/indias-finance-minister-nirmala-sitharaman-says-she-expects-the-central-bank-to-roll-out-the-countrys-digital-currency-this-year/articleshow/90074661.cms"> whether she sees the future of crypto in India</a>, Sitharaman said, “Many Indians have seen a lot of future in it and, therefore, I see a possibility of revenue in it.” The Finance Bill of 2022 also proposes that the Central Bank Digital Currency (CBDC) “should also be <a href="https://www.businessinsider.in/budget/news/digital-rupee-to-be-introduced-by-the-rbi-confirms-fm-nirmala-sitharaman-speech/articleshow/89268343.cms">regarded as bank notes</a>”. The central bank has been working on the CBDC for the last two years, and it plans to conduct a pilot project soon to develop a proof of concept. The bill has already been sent to Rajya Sabha, the upper house, for consideration. Since the Finance Bill falls under the category of a ‘money bill’, the role of the upper house would be limited as the members of the upper house are not elected representatives of people. The suggestions of the upper house may or may not be considered by the lower house. The bill also proposes <a href="https://www.businessinsider.in/business/startups/news/budget-2022-mandates-all-startups-to-disclose-source-of-income-of-their-creditors/articleshow/89315291.cms">amendment to Section 68 of the Income Tax Act</a>, which will put the onus on startups to disclose the source of capital of the creditor they are borrowing from. Besides this, the Lok Sabha is also slated to take up discussions and voting on demands for grants for several ministries, including commerce and industry; ports, shipping and waterways; and ministry of fisheries, animal husbandry and dairying. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/indias-crypto-regulations-dont-recognize-the-full-scope-of-web3-say-experts/articleshow/90414200.cms">India’s crypto regulations don’t recognize the full scope of web3, say experts</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/zee-entertainments-share-price-rallies-up-to-17-as-invesco-puts-down-the-sword/articleshow/90411886.cms">Zee Entertainment’s share price rallies up to 17% as Invesco puts down the sword</a>

Proposal for crypto tax policy will be up for discussion in Indian parliament today

By <keyword id="13186635" type="General" weightage="20" keywordseo="shripal-lakdawala" source="Orion">Shripal Lakdawala</keyword>, <keyword id="13186636" type="General" weightage="20" keywordseo="jatan-shah" source="Orion">Jatan Shah</keyword> and Aashni Shah Even after 6 years of the government providing an ‘in-principle’ approval for strategic disinvestments of 36 of its public sector undertakings (‘PSUs’), the affairs remain in a torpid state. The proposal for such disinvestment was made to ensure reduction of financial burden on the government, elevate the use of technology and thus expand the overall business of the PSUs. However, only 8 out of 36 PSUs have successfully completed their disinvestment procedures and leveraged on the participation of private players. A large chunk of PSUs are still either in the process or haven’t even initiated the process of disinvestment. The ministry of finance, government of India, announced the policy of strategic disinvestment on 1 February 2021 to fulfil the government’s commitment under the Aatmanirbhar Bharat package. Through this policy, the government aims to sell a substantial portion of its stake in the PSUs and use the proceeds to finance various social sector and development programmes. In cases where there is a sale of the entire or even majority of the stake in PSUs, the decision-making power and the control of the companies will shift to a private player. Majority of the PSUs for which strategic disinvestment is proposed are loss making companies i.e., these companies have historically carried forward tax business losses, which are allowed to be carried forward for a period of 8 years under the Income-tax Act, 1961 (‘the Act’). Any potential buyer of these PSUs would want to utilise such losses and set it off against any future income generated by the company. Such losses play a crucial role in determining the value for such loss-making companies. <cmsannotation type="cmsannotation" annotationid="Current scenario" comment="subhead" text="Current scenario">Current scenario</cmsannotation> Currently, section 79 of the Act provides that in case of certain companies, the existing business losses shall lapse on account of a change in shareholding by more than 49%. Accordingly, if the government proposes to sell a stake in PSUs which are not listed or are not held by any listed entity and are not acquired by a listed entity, then in such a scenario, changes in shareholding by more than 49% will lead to a lapse of the existing tax business losses of the PSUs. <cmsannotation type="cmsannotation" annotationid="Proposed amendment" comment="subhead" text="Proposed amendment">Proposed amendment</cmsannotation> In order to facilitate the disinvestment of the PSUs, Budget 2022 proposes to exempt the erstwhile PSUs (i.e., the PSUs in which strategic disinvestment is made by the government), from the provisions of section 79, subject to the condition that the ultimate holding company of the erstwhile PSUs after the completion of strategic disinvestment, continues to hold, directly or indirectly through its subsidiaries, at least 51% of the voting power of such company in aggregate. <cmsannotation type="cmsannotation" annotationid="Is this enough to get the wheels rolling?" comment="subhead" text="Is this enough to get the wheels rolling?">Is this enough to get the wheels rolling?</cmsannotation> In Union Budget 2021, a similar relief was granted for amalgamation of PSUs. Further, clarificatory notification in this regard was issued by the Central Board of Direct Taxes ('CBDT') in September 2021, which is now being formalised by proposing an amendment under the relevant provisions of the act. The previous amendment coupled with the proposed amendment, ensures that there is no lapse on account of carried forward tax losses. While this amendment provides a major relief to the loss-making PSUs which are proposed to be acquired by private sector undertakings, there are a few other requests as well from the industry, to make acquisitions of PSUs lucrative from a tax perspective. Exemption of TDS [tax deducted at source] and TCS [tax collected at source] on such transactions, exemption from obtaining ‘no-objection’ certificates from the tax department, exemption on capital gains on sale of PSUs’ shares and deemed gift taxation on acquisition at a lower valuation, are the few requests from the industry. While there were several expectations from this Budget, only one has been addressed. The proposal in Finance Bill 2022 is a welcome move not only for PSUs which are in the process of disinvestment, but will also speed up upcoming disinvestments. Shripal Lakdawala is Partner, Deloitte India; Jatan Shah is Senior Manager with Deloitte Haskins and Sells LLP; and Aashni Shah is Deputy Manager with Deloitte Haskins and Sells LLP

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Proposal for crypto tax policy will be up for discussion in Indian parliament today

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OPINION: Indian government is still oiling the wheels for disinvestment of PSUs

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