Crypto taxes in India are officially in effect. The Indian government released a statement yesterday detailing the new regulations for crypto taxation. If you are holding any crypto assets in India, it is important to understand how these taxes will impact you. This blog post will break down everything you need to know about cryptocurrency taxation in India. Stay tuned for more updates as they become available!
As of 1st April 2022, there have been a few changes in the income tax rules despite the recent uproar in India. Nirmala Sitharaman gave the news while announcing the Union Budget 2022. A tax rate will be implemented on cryptocurrency and other digital assets. To quote, “any income from transfer of any virtual digital asset shall be taxed at 30 percent.” It looks like Indian nationals will have to familiarize themselves with a few new regulations to ensure they’re in compliance.
No deduction is allowed with respect to allowance or expenditure except the acquisition cost. Losses in digital assets can not offset other sources of income. Business owners will not be able to offset profits or losses between their crypto income and primary source of income. Transaction details will be tracked by Tax Deducted at Source (TDS) on all payments that are made for virtual digital assets at a rate of 1 percent of such consideration above a monetary threshold. Any gifted virtual assets will have a tax that will be due to be paid by the recipient. Loss from one virtual digital asset (VDA) can not be set off against any income arising from the transfer of another VDA. Should the investor be in an overall loss, no tax will have to be paid once accounting for all transactions is completed for said year. No tax is payable on any withheld assets yet to be sold. Taxes are payable once a sale is made and the profit is earned. VDAs include cryptocurrencies and non-fungible tokens (NFTs) that have gained notoriety over the past few years. One percent TDS will be made mandatory as it will be deducted from the entirety of the value of the transaction, regardless of whether you make a profit or loss. Cryptocurrency taxation in India is more complicated than in most other countries. Make sure to consult with an accountant or tax specialist to ensure that you are compliant with the new regulations. If you’re looking to optimize your yearly taxable income, then get in touch with GCG Structuring, and we’ll help you get sorted through professional accountants with decades of experience!