In the last 12 months, crypto is the biggest buzz trend among the Millenials apart from following trends in Insta Reels. The Indian Government has recently brought it under the tax radar and if you are not understanding it, you might just welcome the Income Tax Department to your doorsteps. Let's learn all about the Crypto Tax in this article.
First of all, if you don't know what Bitcoin, Ethereum, or any other cryptocurrency is and how they work, I recommend you to go through my article by clicking the link below to learn everything regarding cryptos.
I tried going through the Budget document to get more clarity on the Crypto Tax as I am an investor in cryptocurrencies. It has been mentioned over there that we will be taxed at 30% for our gains in virtual assets and then I tried looking for the definition of virtual assets. To my surprise, the definition of virtual assets is actually pretty broad. For example: if I have made a painting and then I send it to someone virtually and I charge some fees for it, that income (capital gain) is also considered as capital gain through virtual assets. And this is what I have compiled from the documents. I can be wrong here.
Is Crypto Tax Good or Bad?
A lot of people who invest in crypto were pretty enthusiastic when the Finance Minister announced a tax on virtual assets which include cryptos. They are of the opinion that now the Government is at least acknowledging the existence of cryptocurrencies. But if you look at it through my eyes, I do not understand the reason behind being enthusiastic about it.
For example, before the taxation rule was brought in if I made ₹1000 profit on my Crypto trades, I got to keep the entire ₹1000 for myself. Now, if I make the same profit, I get to keep only ₹700 as the remaining ₹300 will go to the Government as tax. I do not have a reason to be happy about it.
There is also a 1% TDS charge on the crypto trades making it much more difficult for someone who trades on crypto exchanges very frequently.
Did India Legalise Cryptocurrencies With The Crypto Tax?
The Finance Minister of India, Nirmala Sitharaman, informed the Parliament that the tax does not imply that the Government of India is recognizing Bitcoin, Ethereum or any other crypto as any other traditional currencies that exist in our world. They are planning to bring in the Crypto Bill in a future parliamentary session where they will discuss the legality and status of cryptos in the country.
What Has Changed For A Crypto Investor?
I am of the opinion that nothing has changed in the material aspects for a crypto investor. It's just that you have to give some share of your profit to the Government which happens to be 30%. While filing your income tax returns every year, you will need to disclose your profits made through these virtual assets.
The Budget of 2022 has created more confusion regarding these assets. That's my opinion. Well, with that, we have come to the end of yet another article. Consider giving a like and share it among your peers. To get notified of new articles, sign up to the NerdyTree.
Let me know if you have any queries in the comments.
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