EXPLAINED | Crypto Tax: All You Need To Know

How much taxation is imposed on crypto gains? How much TDS will be deducted? Read on to find out.

Crypto gains will face a tax of 30 percent.

Source : Getty

New Delhi: Cryptocurrencies are increasingly becoming a popular topic of interest among investors in India. In 2021 alone, the country attracted crypto funding and blockchain investments worth $638 million (roughly Rs 4,950 crore), as per data from industry tracker Tracxn. While crypto is still unregulated in India, it is considered to be a virtual digital asset (VDA). At the Union Budget 2022-23, Finance Minister Nirmala Sitharaman proposed a taxation policy on VDAs. The new tax regime went into effect on April 1. Here’s everything you need to know on crypto taxes in the country:

Crypto tax: How much tax does one have to pay on gains?

Under the new tax regime, all gains from the sale of VDAs will face a tax of 30 percent. It should be noted that there are no thresholds under which the VDA tax won’t be imposed. This means that even if a taxpayer’s total income is below the threshold limit of Rs 2.5 lakhs, the gains will be taxable.

Crypto tax: How much TDS will be deducted?

A total TDS of 1 percent will be charged on all crypto transactions. This is irrespective of profit or loss. However, in case of loss incurred, the taxpayer will get a refund on the paid amount of TDS.

It should be noted that TDS provisions will be applicable starting July 1.

Crypto tax: Will there be a GST charge?

Earlier this month, it was reported that cryptocurrencies and all related services may face an additional GST of 28 percent. Readers should note that this hasn’t been finalised yet. The GST Council is expected to consider the proposal in a future meeting. But, there hasn’t been any official announcement on the same.

Crypto tax: Will set offs be allowed?

No, under the new regime, taxpayers won’t be able to set off their profits incurred on crypto with any type of losses.

Crypto tax: Will carry forwards be allowed?

No, taxpayers won’t be able to carry forward their losses from crypto to the next financial year.

Crypto tax: Will there be any deductions?

Taxpayers will not be subject to any deductions when it comes to crypto. From the cost of acquisition to the cost of crypto mining, there will be no deductions available.