Union Budget should address VDA tax losses as crypto gains taxed at 30%: SAM Partner

New Delhi [India], January 31 (ANI): In the upcoming Union Budget, investors in virtual digital assets (VDA) are seeking relief on the taxation framework, particularly the ability to claim losses, even as gains from cryptocurrency remain taxable at 30 per cent under Indian law, Rohit Garg, Partner at Shardul Amarchand Mangaldas & Co, said.
"Now, any investor, like you and me, if we are investing in cryptocurrency and earning any gain out of it, that is being taxed at 30 per cent. However, the concern which is being raised by the investor community is, if you are taxing us on the gains, please provide us the benefit of any loss that is being made," Garg said in an interview with ANI in the national capital.
Garg said VDA taxation is provided under the Income Tax Act, 1961, and has been carried forward in the new income tax code. He said VDA covers cryptocurrencies, including Bitcoin and other stablecoins. He added that the need of the hour is that, if India wants to tax and continue to tax such gains and losses -- which are otherwise allowable for other capital assets-- VDA investors should be allowed to claim them as well.
Beyond VDA taxation, Garg said the foreign investor community is looking for tax certainty in international taxation. He said India is transitioning to the new Indian Income Tax Act, effective 1 April 2026, and that predictability and certainty should be provided to foreign investors.
"Foreign community is definitely looking for tax certainty of late," he said, adding that there have been tax rulings from the Supreme Court of India which have shaken the confidence of the foreign community.
Garg said there have been tax rulings from the Supreme Court of India which have "shaken the confidence of the foreign community."
He said tax certainty is linked to the tax rate applied and the income tax administration's position on a transaction. He said disputes often take years to settle, with taxpayers litigating up to the Supreme Court before certainty emerges.
"What is needed at this stage is that the Indian tax administration should bring out proactively all the circulars, notifications, clarifications, whereby on each and every aspect that impacts the foreign investment should be clarified upfront," Garg said.
On trade and investment sentiment, Garg said foreign investors want to invest in India but are seeking tax certainty. He also referred to the India-EU trade deal as a path-breaking agreement, adding that investors want predictability even when there is a tax cost.
Speaking on compliance, Garg said geopolitical tensions would neither increase nor reduce the burden of tax compliance for investors in India.
Responding to a query on tax litigation, Garg said appeals are increasingly being filed in digital form, but noted that more than 5 lakh appeals are still pending at the first appellate forum, resulting in revenue being stuck.
He said the Budget should provide a redressal mechanism to expedite the disposal of appeals and also called for the reintroduction of the income tax settlement commission, which was removed in an earlier budget. (ANI)