Taxpayers must declare income from virtual assets – News

Virtual assets have become very popular in recent months in India

The bill further provides that no losses of another business can be deducted from profits arising from trading in crypto assets.



By HP Ranina

Published: Sat 12 Feb 2022, 16:29

Question: I learned that virtual assets must now be taxed under Indian law as per recent budget proposals presented this month. Is it done to curb speculation?

Responnse: Virtual assets have become very popular in recent months. A lot of business activity on these assets has taken place and therefore the government wants to tax the profits at the flat rate of 30%. Although this rate seems to be quite high among all asset classes, certainty and clarity have been introduced by the budget proposals. No expense will be allowed as a deduction when calculating taxable profit. Some analysts have criticized this high tax rate on the grounds that trading crypto assets requires specific skills and cannot be compared to gambling or speculation.

The bill further provides that no loss of another business can be offset against profits from trading in crypto assets. Taxpayers will now have to report income from these virtual assets in a separate column when filing their tax returns. The data on these transactions will be entered by the tax authorities given that a tax at the rate of 1% will have to be deducted at source when the transaction is carried out.

Question: Due to the practice of working from home during the Covid-19 period, many people are working multiple jobs in India and the main employer is not able to detect it. Is this legally allowed?

Responnse: The restrictions on dual employment in India are included in the labor laws that apply to factories and industrial units. Many professionally run businesses as well as family businesses have a negative clause incorporated into the hiring letter preventing employees from accepting any other employment or starting a business activity while maintaining their current job. In such cases, if some employees resorted to moonlighting, it would be illegal and the employee’s services could be terminated. In many contracts, liquidated damages are collected by the employer in case of violation of the terms of the contract.

If an employee has multiple provident fund accounts because they work for more than one employer, the information will be available and an employer can take action against these errant employees. The government is now considering creating a hybrid workforce that covers part-time workers. In other words, employees will have the choice of working for multiple employers/companies provided that full disclosure is made to each such employer and that no conflict of interest arises as a result of such multiple employment.

Question: Will global warming have an impact on those involved in outdoor work? Will it lead to loss of labor productivity?

Responnse: According to a study published in Nature Communications, if the temperature rises even one degree centigrade, it could lead to the loss of hours of arduous work due to heat and humidity. Depending on the climate models used, the study indicates that the loss could be around 259 billion hours per year. This would be particularly the case in South, East and Southeast Asia, where a large number of people of working age are engaged in agricultural activities.

According to the analysis of an international agency, a two degree rise in temperature could lead to a loss of approximately 225 billion dollars adjusted to purchasing power parity. In China, an estimated 21 to 72 billion working hours are lost due to global warming. Other countries with substantial losses are Bangladesh, Indonesia and Sudan. These estimates are based on the latest empirical model that takes into account a wide range of temperatures and humidity to study the impact on labor productivity. Taking all the countries in the world, annual heat-induced labor productivity losses are estimated at $2.1 trillion. For some countries, this equates to more than ten percent of gross domestic product.

HP Ranina is a practicing lawyer, specializing in tax management and foreign exchange laws of India.

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