New Crypto tax rules have applied in India from 1st April’22, where the crypto investors will now have to pay tax on the gains made on their crypto investments.
The announcement of imposition of tax on the cryptocurrency income was made by the finance minister during the presentation of Union budget 2022-23.
It was clearly stated that any income made through the transfer of any digital/virtual asset will be taxed at 30%.
Bringing the cryptocurrencies under the taxation structure is an unprecedented move in India, this may provide impetus to the cryptocurrency trading amid the formal laid structure and within the requisite regulatory measures imposed by the government.
The income tax will be levied on the crypto income similarly as levied on income from windfall gains like lottery, horse-race or any other speculative wins.
Taxation on Crypto Income and NFTs in India w.e.f. 1st April’22
- The income tax will be levied at 30% along with cess and surcharges.
- A TDS of 1 % will be deducted whenever any crypto transaction takes place. The TDS will be deducted by the buyer from the seller of the cryptocurrency wherever the transaction exceeds Rs. 10000/-
- The smaller trades in cryptocurrencies will also be taxed if the cumulative value of such trades exceed Rs. 50000/- in a given financial year.
- The investors will be refunded the excess TDS paid by them; in case the tax liability is less than the actual amount of TDS deducted.
- The Crypto tax is listed under the new section 115BBH of the finance bill, which deals with tax on virtual digital assets.
Golden Rules for Investment in Cryptocurrencies and NFTs in India after 1st April’2022
- A tax of 30% will be levied on the income generated from the sale of any cryptocurrency or NFT or any other digital asset by the government.
- Only the profits made from the sale of cryptocurrencies or any other digital asset will be subjected to 30% tax.
- The tax will not be levied on the losses made through the sale of any digital assets, thus the loss from sale of cryptocurrencies is kept out of the taxation structure.
- The losses incurred from the sale of the digital assets cannot be set off against the other generated income. For example, the losses cannot be set off with the profits made through mutual funds, shares etc.
- The losses incurred from the sale of digital assets cannot be carried forward to the next financial year with the motive of setting it off from the income of the subsequent year.
- A levy of 1% TDS on digital asset transactions above Rs. 10000/- is proposed by the government which can be later on claimed by filing income tax return at the financial year closing. Thus, in case of losses incurring from the sale of digital assets TDS can be claimed back by filing ITR.
- The levy of TDS on digital asset transactions will be in effect from 1st July’22 as per news sources.
- In case of gifts of cryptocurrencies or NFT or any other digital the recipient of the such digital asset will be liable to pay 30% income tax on the such gift.
Disclaimer: Investments in Cryptocurrencies and NFTs is subject to market risks, please invest in the same after detailed personal research. The above information is solely for information purpose, we do not promote investment in any avenues.