The Indian government on Tuesday introduced a proposal to levy a flat 30% tax on Cryptocurrency and NFTs(Non-Fungible Tokens) in its country budget for the financial year.
Along with that, it rolled the red carpet for its official digital currency, the digital rupee, backed by RBI, the country’s central bank.
Any income from the transfer or transaction of cryptocurrency in India will attract a flat rate of 30% tax. This does not include the 1% TDS on any crypto-related transaction that will occur on every virtual digital asset (including crypto) in the country.
Suppose you originally bought Rs. 1 Lakh worth of Bitcoin. The prices of Bitcoin went to the moon, and now your holding is worth Rs. 2 Lakh.
Now you cash out the profit and sell all of the bitcoin for Rs. 2 Lakh. Here the total profit is Rs. 1 Lakh.
As per the proposed 30% tax on Cryptocurrency profit, you will have to pay Rs. 30,000 to the government and the remaining Rs. 70,000 goes to you.
Setting off losses while computing income means deducting the losses from the total income of the financial year, thus helping in reducing the tax burden on the taxpayer.
The answer is NO. According to the Section 115BBH: Chargeability of Income on the transfer of Virtual Digital Assets:
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In easier words, you cannot set off losses that arise from cryptocurrency (virtual digital asset) while computing your total income.
You don’t have to pay any tax while buying(apart from the 1% introduced TDS) and holding cryptocurrency. Only when you sell it for profit will it be taxed at 30%.
As of now, YES, you will have to pay tax even when your yearly income does not touch a taxable income slab.
In a nutshell, you will need to pay taxes on profits arising out of cryptocurrency.
You will NOT be liable to pay taxes on losses incurred by selling cryptocurrency holdings. The Crypto tax is profit-based taxed, meaning it is only applicable on the profits earned from the sale of cryptocurrency (and any other virtual digital assets)
The proposed Crypto tax(Virtual Digital Assets) will come into effect from April 1, 2022.
With the Cryptocurrency tax introduced in the budget for the financial year, there is still a lot of confusion and uncertainty regarding the language used by the finance ministry on the subject.
Many crypto supporters have welcomed the move of taxation, citing the currency’s legitimacy by law. Others have expressed their concerns over losing the essence of cryptocurrency, which is decentralization, through India’s official cryptocurrency proposal.
We wait for the official Cryptocurrency bill to be tabled in India’s lower house which will define the way for the decentralized currency in the country.
Are we going the China way of a comprehensive clampdown or find a more liberal path? It will be interesting to see how things pan out.
The post Indian Government slaps 30% Tax on Cryptocurrency, What’s Next? appeared first on TechWorm.
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