New Delhi: From April 1, cryptocurrency gains will be taxed 30%. This is considered as the highest tax bracket and the rate remains the same as that of earnings from a lottery. This would apply to all virtual digital assets (VDA) and their earnings from Bitcoin to non-fungible tokens (NFTs).
For instance, if a crypto investor buys crypto for Rs 10,000 and sells it for Rs 15,000, gaining a profit of Rs 5,000, then a 30% tax will be levied on the profit made by the investor.
Besides, the Union Budget 2022-2023 had proposed a tax of 30% on cryptocurrency assets. A 1% tax deducted at source (TDS) on virtual currency contributions exceeding Rs 10,000 per year was also recommended.
Thus, crypto investors should be aware of a few regulations concerning 2022-2023 fiscal:
- If an investor is suffering a loss with no earnings, no tax will be required to be paid after accounting for all cryptocurrency transactions that have been done for the year.
- Moreover, investors won’t be levied tax if they have purchased a crypto asset that has increased in value but are left to sell it. Till they sell it and make a profit, the gains will not be taxed.
- Losses experienced from one kind of VDA cannot be put against the gains from any transactions involving other VDA while computing tax. This means that investors will have to pay 30% tax for every gain secured while losses are not deductible from the final taxation amount with different tokens being traded. Thus, on earning a profit on one token but losing on another, you are still required to pay 30% on the profited token.
- On July 1, TDS will be implemented which will be subtracted from the whole transaction value, irrespective of whether the investor makes profit or loss.
- Experts and those who are owing a business won’t be able to set off profits or losses between their main income and cryptocurrency income.