ICAI released Handbook on Taxation of Virtual Digital Assets

The Institute of Chartered Accountants of India (ICAI) has issued Handbook on Taxation of Virtual Digital Assets (“VDA”).

These days, cryptocurrency is all the rage. Numerous individuals and businesses from different nations are buying and storing cryptocurrency. Due to the pandemic, people were forced to stay at home, which gave them plenty of opportunity to experiment with different fields. In such endeavours, Crypto was one among the front-runners. The volume of transactions and presence has led many people to conclude that cryptocurrencies are similar to virtual digital assets.

A subset of all digital assets traded on a blockchain, such as non-fungible tokens (NFTs), cryptocurrencies, and other virtual assets, is referred to as a virtual digital asset (VDA). Simply put, it refers to digital currencies, DeFi (decentralised finance), and non-fungible tokens (NFTs), albeit it is not confined to these assets.

All currency notes, postal notes, postal orders, money orders, checks, draughts, travellers’ checks, letters of credit, bills of exchange, promissory notes, credit cards, and any other similar instruments that the Reserve Bank may make known are considered to be currency.

One of the first cryptocurrencies to enter the market was bitcoin, which was created by Satoshi Nakamoto. Following that, a number other cryptocurrencies entered the market; some of the most well-known ones include Litecoin, Bitcoin Cash, and Ripple (XRP). By 2022, there will likely be thousands of cryptocurrencies, according to estimates.

Cryptocurrency has been shrouded in secrecy, and this has, in many countries, been a source of legal concern for a considerable amount of time. The issue of whether or not cryptocurrency is legitimate as legal tender or as a means of acceptance in the payment settlement system has given rise to an interesting debate. The additional taxation issue has also proved difficult for the government exchequer. All along, there has been a constant air of mystery and intrigue. This has made it difficult for the legal systems in charge of managing currencies in various regions. This has also caused the taxman some concern as a necessary consequence.

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