The government may consider granting traders of digital currency a limited set-off of one year’s losses from trading against profits generated in the same financial year, in response to calls from the cryptocurrency market players to review some aspects of the tax on virtual digital asset transactions, according to The Economic Times.

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Such provisions are now authorized in both listed and unlisted stock transactions. The existing laws enable a stock trader to carry over a loss in one fiscal year for a period of 4-8 years, depending on the nature of the deal. If the profits are part of a ‘capital gain’ or ‘business income,’ this helps to reduce the tax liability.

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In the stock market, losses from speculative trades, such as intraday and high-frequency transactions, can be deducted from speculative profits over the next four years. The trader, on the other hand, cannot offset long-term losses carried forward against short-term gains made throughout the year.

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According to recent talks between senior tax officials and tax practitioners, cryptocurrency traders may not have the same level of leverage as stock market players. However, tax authorities may consider amending the Finance Bill to allow some compensation for cryptocurrency losses.

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The requirements for crypto tax set-offs were derived from Section 115 BBE of the Income Tax Act, which deals with hidden income and taxability. The issue is anticipated to be reviewed by officials, according to the business daily.

“It is for discussion whether we would stay with this or allow a set-off within a year,” ET quoted an official as saying.

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On February 11, representatives from the cryptocurrency industry met senior Finance Ministry officials in  North Block to encourage them to rethink several parts of the new tax policy. This is the first contact between industry representatives and policymakers since the crypto tax was announced on February 1.

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Finance Minister Nirmala Sitharaman announced a 30% tax on gains from virtual digital assets beginning in April when she presented the Union Budget on February 1. Furthermore, the finance minister recommended levying a 1% TDS on payments of virtual currency exceeding Rs 10,000 per year, as well as taxing such gifts in the hands of the receiver.