How will Cryptocurrencies be Taxed in India | Crypto Tax Calculator

The finance minister made it clear on Tuesday that apart from the RBI’s digital rupee, all coins present in the crypto world will be counted in virtual crypto-assets India. If anybody makes a profit in their transactions, then we will levy 30 percent tax on that. For example, if you earn 100 rupees on selling bitcoins, then you have to pay 30 rupees as tax to the government. Similarly, one percent TDS will also be charged on every transaction in the crypto world. With TDS, the government will get to know the transactions of crypto and it will be able to collect crypto tax in India.

 Will the entire investment in crypto be taxed

It’s not like this. You only have to pay tax on profits from cryptocurrencies. For example, if you bought cryptocurrency for five thousand rupees and sold it for five thousand 500 rupees, then you will have to pay 30 percent tax i.e., 150 rupees on only 500 rupees.

Will I also have to pay tax if I gift cryptocurrency to someone?

No. The finance minister has clearly said that those who get cryptocurrency will have to pay crypto tax in India. That is, if you gift a bitcoin to a friend of yours, then he will have to pay tax. However, it is not yet clear whether inherited cryptocurrencies will be subject to this tax. Some experts are saying that this rule will be applicable under gift tax. The rules of gift tax are clear that there is no tax to be paid on gifts given to close relatives i.e., brothers and sisters.

There has also been talk of 1% TDS, how will it be applied? 

The finance minister told in the press conference after presenting the budget that every crypto transaction will attract a TDS of 1%. This TDS will have to be paid by the transferee.

Is the government accepting, promoting, or discouraging crypto by taxing it?

Actually, the government wants to discourage investment in cryptocurrencies by imposing such a tax. However, those associated with the crypto world are seeing this move of the government as a step to include digital assets in the mainstream.

Will I be able to make up for the loss in one digital asset with another?

If there is a loss in Ethereum, it will not be able to make up for the gain in Bitcoin. Each asset i.e., the unit will operate separately, the profit earned on it will be taxed. The loss will not be compensated.

Is This the Right Time to Buy Cryptocurrencies?

No. The taxation rates will be applicable from the next financial year. In such a situation, to avoid tax, there can be a large-scale sale before March 31. If this happens, the cryptocurrency will be volatile. There has been no clarification from the government about the legality of the cryptocurrency so far and the Reserve Bank is against it. In such a situation, the possibility of banning crypto completely by bringing virtual rupees cannot be ruled out. If there is a loss on investment in crypto, then the government will not be responsible for it. You can also make use of a crypto tax calculator to get the exact value of taxation on crypto currencies.