Cryptocurrency Tax To Kick Off From April 1. Here’s What You Need To Know
Union budget for 2022-23 has proposed a 30 per cent tax on cryptocurrency assets
Cryptocurrency gains will be taxed at 30 per cent beginning April 1. It's the highest tax bracket and the rate is the same as earnings from a lottery. This would apply to all virtual digital assets (VDA) and their earnings, from Bitcoin to non-fungible tokens (NFTs). For example, if an investor purchases a cryptocurrency for Rs 10,000 and sells it for Rs 15,000, making a profit of Rs 5,000, they must pay a 30 per cent tax of Rs 1,500.
The Union Budget 2022-23 had proposed a 30 per cent tax on cryptocurrency assets. A 1 per cent tax deducted at source (TDS) on virtual currency contributions exceeding Rs 10,000 per year was also recommended.
Cryptocurrency investors, however, will need to be aware of a few regulations in order to stay on the right side of the law in the 2022-23 fiscal.
If an investor is in loss overall with no earnings, there will be no tax to pay after accounting for all cryptocurrency transactions that have been done for the year.
Similarly, investors won't be taxed if they have purchased a crypto asset that has considerably increased in value but are yet to sell it. Till they sell it and make a profit, their gains will not be taxed.
Losses incurred from one kind of VDA cannot be set off against the gains from any transaction involving another VDA while computing tax. This implies that investors will have to pay a 30 per cent tax for every gain they make and losses are not deductible from the final taxation amount if different tokens are traded. So, when you earn a profit on one token but lose on the other, you are still obligated to pay a tax of 30 per cent on the profited token.
On July 1, 2022, the 1 per cent TDS will be
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