Does the Union Budget 2022 make Cryptocurrencies ‘Legal’ in India?
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- By Taxmann
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- Last Updated on 25 February, 2022
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Prof. Anshuman Singh & Purushottam Anand – [2022] 135 taxmann.com 316 (Article)
The Finance Bill 2022 has introduced a 30% tax on income earned from the ‘transfer’ of Virtual Digital Assets (VDA). Based on this, many commentators have suggested that cryptocurrencies are now ‘legal’ in India. Does the imposition of a tax liability on income from a certain activity, necessarily legalise it? This is the brief issue we consider below.
We must begin by highlighting that India’s Income Tax Act is ambivalent about the means of acquiring income. That is to say, incomes derived from legal as well as illegal activities are liable to be taxed. Since tax authorities are unconcerned with the manner or means of acquisition, incomes earned illegally or unlawfully are also required to be included in the total taxable income. In short, any illegality tainting the earning has no bearing on its taxability. This legal position has been confirmed by many decisions of Hon’ble High Courts and also by the Hon’ble Supreme Court.
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