Crypto Tax: What investors need to know

economictimes.indiatimes.com:

crypto investors will be filing their taxes on gains and claiming TDS refunds, where applicable. The process will give regulators greater visibility into the fast-growing Indian crypto market, and help establish trust and transparency in the ecosystem. For a taxpayer, there are new schedules to be filled.

Regular crypto traders with multiple transactions could find it all a bit overwhelming, and hence it is advisable to take the help of a qualified tax adviser. There is no substitute for a professional tax expert. Nevertheless, a few things are worth keeping in mind.All gains are taxableThe world of crypto, or Virtual Digital Assets to use the official term, has financial activities beyond just buying and selling the asset according to the market movement.

There are crypto-specific activities such as staking, wherein an asset holder “locks up” their crypto in the blockchain network to support its operations and earn rewards in return. Crypto itself comes in different forms — NFT or non-fungible tokens are a type of digital asset that represents ownership of an item, be it artwork or tokenized form or a real-world asset. There are creators who mint NFT on the blockchain, often by paying a transaction fee, and there are collectors who trade them.

As per the rules specified by the Indian government, gains from all such crypto transactions are taxable at a flat rate of 30%. These rules, introduced during the 2022 Union Budget, are governed by Section 115BBH of the Income Tax Act, 1961. As it stands, profits from a crypto transaction cannot be offset against losses incurred from another transaction, or even another asset.