BUSINESS

Crypto Tax in India: A warning message behind the control?

Crypto Tax in India
Written by NEWS-78

This decision has been taken this year. The government has imposed a 30 percent tax on cryptocurrency profits. Apart from crypto, non-fungible tokens (NFTs) were also registered under Virtual Digital Assets (VDA) in the country along with similar entities. After that, the income stream comes down. These virtual digital assets have been heavily taxed from April 1. At first glance it appears that this is a drastic step by the government. However, there is another idea behind it. Basically, this step is taken to warn depositors before investing in volatile markets like cryptocurrencies. This initiative is to ensure that investors do not lose all their money in the hope of high returns in a short period of time. About crypto before investing in this volatile market

It is very important to have correct knowledge. That is why the government has taken this precautionary step. Also, this tax has given a kind of legitimacy to the Center instead of banning crypto-currencies in the country. Investors and traders worried about the future of crypto in the country can now invest in this digital asset without any worries.

Let’s first see the cryptocurrency taxation picture in India. Also knowing where it is different from the outer world
We will take

How much tax is charged on crypto profits in India?

In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman proposed a tax policy on Virtual Digital Assets (VDA). Where it was stated, the government would levy a 30 percent tax on all profits from the sale of VDAs. Note, no limit is given below which VDA tax will not be levied. That is, if the total income of a taxpayer is less than the limit of 2.5 lakh rupees, then the amount of his profit will also be taxed.

At best, 1 percent TDS will be deducted on all VDA transactions. which will be debited or paid to the seller by the crypto exchange.

How is India’s tax structure compared to other countries?
In the United States, cryptocurrencies are subject to capital gains tax. Like stock or stock market is taxed. Crypto is taxed at (0-37) percent at federal tax rates in the US. For example, if you invest $100 and receive $120, your capital gains tax is $20.

Britain has a similar tax structure with crypto. There is also a tax-free allowance of up to GBP 12300 in addition to capital gains tax.

There are some countries that are considered crypto ‘paradise’. Cryptocurrency is not considered a currency, commodity or stock in Germany. This is considered personal finance. If you’ve held crypto for more than a year, you don’t need to show them on your tax return. Not only that, the profit or sale transaction is also tax-free. Remember, if you sell your crypto within 12 months, the profit of up to 600 euros will be tax-free. On the other hand, corporate income tax is payable on crypto profits.

Likewise, virtual digital assets are not subject to capital gains or other taxes on cryptocurrency income in Bermuda.

Crypto Tax in India: Regulation or Caution?

India’s tax structure may seem a bit more flexible than some countries. Similarly, compared to some countries, India’s crypto tax seems more stringent. However, the announcement of crypto tax in India has been welcomed by everyone from crypto traders to investors in the country. At one time there was speculation that crypto would be banned in the country. However, investors believe that the central government has finally given legitimacy to this digital asset by taxing it.

It has now become clear that the government is looking to launch a central bank digital currency (CBDC) soon, another sign of India’s pro-crypto stance. Many people do not know that CBDCs actually represent a virtual form of fiat currency, such as the rupee in the case of India. This legal tender will be issued by RBI in digital format. Since it will be considered a digital token of the country’s official currency, it will be under the control of the central bank. CBDC is expected to support India’s banking system. Also, this new system will complement the existing structure.

That being said, cryptocurrency is heavily taxed in India. Crypto tax rates in India are higher than any other asset class. Comparatively, securities in India are taxed at 10 percent on long-term capital gains and 15 percent on short-term capital gains.

Remember, even after deducting 30 percent tax from crypto you don’t get exemption. 1% TDS thereafter. This tax structure has come into effect from July 1. The Central Board of Direct Taxes (CBDT) had organized ‘Frequently Asked Questions’ (FAQ) since June to understand this tax on crypto in detail.

Some see this initiative as a positive step. Satvik Vishwanath, CEO and co-founder of crypto exchange UnoCoin, said, “On behalf of the association, we explained the practical issues with the way the government thinks about TDS. I proposed an effective solution. The government has kept its word. The ministry has issued our guidelines as a standard operating system to collect information and money in TDS. I see this as a small win for the crypto community. We are positive from other departments as well. Awaiting steps.”

Prashant Kumar, founder of crypto trading platform WeTrade, told ABP Live, “We have decided to remove 100 percent TDS burden from our customers. Customers will be given instant cashback equal to the TDS deduction, making it easier for them to comply with the rules. Will go. WeTrade really makes crypto investing easy and rewarding. We will make it a TDS free platform to make more customers like it.”

He further said in this regard, “We at WeTrade heartily welcome the clarification given by the Ministry of Finance on TDS in VDA. This initiative by the government is positive. It will bring more transparency in crypto investment. Also the status of investment. It will be easily known. It will help the development of VDA in the long run with the help of regulators.”

However, Kumar did not stop there, he said, the government’s move is “extremely commendable”. As a result, common depositors do not face hassles while investing. 1 percent TDS is applicable only at the time of sale, which can be claimed in the next year’s filing.

After all, the common people of the country still do not know much about crypto. Nowadays KYC, mobile app exchange, wallet and government ID proof have made it very easy for investors to invest in crypto. So the government is on track for more tax cuts in crypto. Basically, the reason for this government warning is to ensure that investors understand the expected returns in detail before investing in VDAs.

About the author

NEWS-78

Leave a Comment