ITR Filing 2024: How cryptocurrency gains are taxed in India
As the deadline for filing income tax returns approaches, cryptocurrency investors in India are preparing to navigate the complexities of crypto taxation. While the concept of taxing crypto assets is relatively new and can pose challenges for investors, the evolving landscape of innovation and technology has introduced simplified solutions for crypto tax filing provided by compliant exchanges in India. These exchanges have taken proactive measures to ensure tax compliance for their users, forming partnerships with leading tax solution providers to automate the calculation of crypto tax obligations tailored to Indian investors’ needs.
Recognizing the significance of crypto assets, the Finance Act 2022 introduced tax regulations for crypto assets in India. These assets are classified as “virtual digital assets” or VDAs under the Income Tax Act, 1961. According to Section 115BBH of the Act, any income from the transfer of VDAs is subject to a flat income tax rate of 30%. Taxable events include transactions such as converting digital assets to fiat currency, trading between different types of virtual digital assets, or using VDAs for purchasing goods and services.
Income received in the form of VDAs as part of salary falls under standard income tax slabs applicable to individual taxpayers, rather than under Section 115BBH. However, any gains accrued from subsequent transactions involving the transfer of such VDAs are subject to tax under Section 115BBH.
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Calculating the 30% crypto tax rate in India is straightforward, as it applies uniformly to all investors regardless of income nature or holding period. For instance, if an investor realizes a
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