Budget 2023: Overseas VDA Gains Under Tax Net
Bureau Report
Budget 2023 has offered a great relief to individuals by raising the threshold limit on individual tax income, but it has fired salvo at overseas cryptocurrencies / virtual digital assets (VDA) by bringing these assets under the tax purview.
Nitin Kamath, Founder & CEO at Zerodha, expressed his view on social media. He Tweeted, “For retail investors, I guess the only material change in the budget is for people who invest in international stocks. Money sent out using Liberalized Remittance Scheme (LRS) (other than for Education and medical purpose) now has a Tax Collection at Source (TCS) of 20% with no upper or lower threshold, compared to 5% over Rs 7lks earlier.
TCS can be claimed after filing income tax returns at the end of the year, but it’s unlikely that many will be okay with having 20% of capital blocked until then.
This will adversely affect all platforms offering international stocks and international crypto exchanges.
A fund manager with a leading domestic brokerage firm who doesnt wanted to be quoted seconds the opinion. He warned that any investment undertaken without informing the government would attract a penalty of Rs 10 Lakh. An investor would have to either pay the tax at source 20% or block his capital
Well, experts may challenge the decision of tax incidents citing the jurisdiction issue, but by widening the tax net, the government has actually let the cat out among pigeons.
More to follow…..
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