Cryptocurrencies will now finally be taxed in India. In her Budget speech on February 1, Finance Minister Nirmala Sitharaman said the transfer of digital assets - and these includes cryptocurrencies and non-fungible tokens- will attract a 30 percent tax. Additionally, all transfers of such assets will attract 1 percent tax deducted at source (TDS). Even gifting such assets will attract the 30 percent tax.
While we await clarifications and a detailed order by the tax department on how this would be implemented, Moneycontrol spoke to chartered accountants to get answers to some of the most frequently-asked questions to get a sense of the impact it will have on you. Here’s what they had to say:
Karan Batra, founder of Chartered Club, a tax consultancy
The new provision to tax cryptocurrency gains at 30 percent will come into force from April 1, 2022. So, it will not affect those who sell their crypto holdings this financial year. They can look at booking profits or losses before March 31, 2022. So, if you are sitting on gains and sell your holdings in this financial year, then these would not be taxed at 30 percent, which will be the case after April 1. The price of Bitcoin has fallen so some may have incurred losses too. Now is the time to book losses – these can be carried forward and set off against gains made from other assets next year.
Ashok Shah, chartered accountant and founding partner of N A Shah Associates LLP
The proposed amendments would mean that crypto participants can only book losses before March 31, 2022, if they desire to set off such losses against other income. So, each participant will have to examine their own nature of income, and see if they have a need to use these losses in the current financial
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