Must Know Things About The Cryptocurrency Tax To Avoid Troubles!
Have you invested in cryptocurrency? Do you know about the tax on cryptocurrency? If not, you should know about cryptocurrency taxation in detail to avoid potential troubles. Cryptocurrency taxation in India is still a new field, and the Government is still looking for how to deal with the cryptos economically. But, it has not stopped the Indian crypto investors and traders from investing in different cryptocurrencies and making huge profits.
Understanding crypto taxation in India becomes more critical for crypto traders in the present scenario. It helps them to handle their crypto profits properly and avoids paying hefty taxes to the Indian Government. In this blog, you will learn many important things about the cryptocurrency tax in India. It renders you enough understanding and acts smartly to avoid penalties and other consequences.
Cryptocurrency taxation in India
According to the Union budget 2022-23, crypto gains will be taxed at 30%, which is the highest tax bracket. Since April 01, 2022, this tax rule has been effective. This would apply to all virtual digital assets such as Bitcoin and NFT. Indian Government will charge taxes on selling crypto for cash or buying goods. Compared to mutual funds and equities, cryptocurrencies will be taxed at a higher rate.
There would be no deduction in expenditure or allowance when computing income from the cryptocurrency. Crypto investors will get 1% TDS on crypto transactions over Rs.10000 per year.
Remember that all the crypto gains earned during the year will be taxed at 30%. Investors are not taxed for buying and holding the cryptos. On the other hand, if you lose money on crypto trades, you can claim the loss and save on your capital gains taxes.
Know about crypto taxable events
Knowing the scenarios where you must pay the tax for your cryptocurrency transaction is highly important. It helps you to decide what to do further and avoids paying taxes.
At first, any crypto that you purchase or sell is considered to be the sale of goods and services by the Government. Such a scenario is considered taxable under India’s Income Tax Act. In simple terms, all the revenue gained from the crypto purchase and selling process is taxable for income tax.
You need to pay the tax if you are a crypto miner and generate revenue by mining cryptocurrency. When you receive the cryptocurrency as gifts in large quantities, you become qualified to pay the tax for cryptocurrency.
You do not get taxed by the Income Tax Act upon asking the trader to send cryptos as gifts. But, receiving the crypto with the value of Rs.50000 or more is taxable. Businesses that perform crypto transactions and hold crypto assets are taxable under the CGST act.
Conclusion
While reading the above section, you get an idea about the cryptocurrency tax. To invest in crypto, you should research and know in-depth about crypto taxation. It helps you to avoid potential hassles. You can even seek professional assistance to stay away from crypto taxation issues.
