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Neither Gift Cards Nor Mileage Points Are Digital Assets: FinMin

In the Finance Act of 2022, the government had instituted a new tax regime for virtual digital assets that provided for a 30 per cent tax without any set-offs for losses

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A new tax regime introduced by the Finance Act 2022 declares gift cards and mileage points not to be virtual digital assets.

The explanation provided by the ministry targets at helping those who own these assets as well as professionals to go along with the new tax regime for virtual digital assets.

In the Finance Act of 2022, the government had instituted a new tax regime for virtual digital assets that provided for a 30 per cent tax without any set-offs for losses. Tax deduction at source (TDS)  of one per cent is also imposed on transfers of virtual digital assets to residents.

The ministry announced on Thursday that several benefits will be dropped from the definition of virtual digital assets. 

There are several types, including vouchers, gift cards, reward points, or loyalty cards, all of which can be used to obtain goods or services; It is sometimes called "mileage points," "reward points," or "loyalty cards." These are records that are not redeemed directly for goods or services, but rather can only be used toward purchases, subscriptions, or purchases of websites or apps.

Additionally, the ministry clarified in another order the types of non-fungible tokens covered in the new tax system.

The government clarified how digital assets would be subject to TDS provisions last month. A new section 194S of the Income Tax Act implements the TDS provision. In certain instances, such as the transfer of a digital asset that is in kind, it is required to ensure that the tax has been paid before the transfer takes place. 


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finance ministry Finance Act