A Comprehensive Guide On Crypto Gain Asset Taxation In India
One of the main reasons for the increase in the popularity of crypto currencies and blockchain technology is lack of clarity on how to tax it. In case you are an individual or a startup, this guide will help you understand which taxes apply to which transactions. The guide covers taxability of cryptocurrencies as well as trading, mining and investing funds into crypto. Thus, if you are looking for a comprehensive list to understand all your options from a taxation perspective in India, this article is for you!
Cryptocurrency Tax Rates in India
The crypto tax in India has an effective rate of 41.88% as a capital gains tax . This is the case when you’ve held your crypto for less than a year (12 months) or sold it before that time span. One important thing to note is that if you’re an individual living in India and trading or holding crypto, your capital gains are not taxed on the same schedule as your normal income and are computed in a different manner.
How was Cryptocurrency Capital Gains Taxed in the Earlier Years?
In the case of the first three years of holding cryptocurrency, which is prior to April 1st 2017, no tax was charged on capital gains. This is because there wasn’t any law that applied to cryptocurrencies at that time. However, this changed when Finance Act 2017 came into effect on April 1st 2018. After this date, crypto income-tax rates were increased from 15% to 20%.
How is Cryptocurrency Income Taxed in India?
There will be crypto tax If you’ve held crypto for over a year or sold it before this time period, then the income from these transactions are taxed at an effective rate of 20%. This is because cryptocurrency is currently considered as an asset class, which is similar to gold or silver. However, this may change soon as the income from cryptocurrency transactions.
How to Fill Your ITR when it Comes to Crypto Taxation?
The salaried individual should head over to the tax filing website and log in using their taxpayer ID and Date of birth. Once logged in, you’ll need to select the “Income Tax Return Filing.” Next, select “Assessments” and type in your name and date of birth to start your return. This process should take you no more than a few minutes.
The income tax return filing is not the same thing as your annual tax filing that you do at the end of March every year. That only calculates how much tax you owe or reduces what you owe but doesn’t calculate any gains made during the year. In India, crypto-related gains are treated differently than other forms of income and need to be accounted for separately.
I hope you found our blog helpful. If you are looking to use crypto tax software then I will surely recommend you to use Binocs. Binocs is one of the best software which is available in India and will provide you with an automatic complete taxation solution.