India is starting to see popularity with cryptocurrencies. These days, lots of people buy Bitcoin, Ethereum, and other digital coins. But things can get perplexing when it comes time to pay taxes. Filing crypto taxes is something you need to be aware of if you have cryptocurrency profits.
Allow me to simplify it rather broadly.
Is Indian crypto income tax liable?
Indeed, exactly. Any income you make from selling cryptocurrencies is taxable per the new government regulations (since 2022). You should thus investigate filing crypto taxes whether your income came from selling, trading, or gifting cryptocurrencies.
How does the Crypto Tax get computed?
- Flat thirty percent tax on income
- Not permitted any deductions (except from purchase costs)
- Every transaction over ₹50,000 (or ₹10,000 in some cases) counts 1% TDS
- One cannot change losses in cryptocurrencies with any other income
Example: Profit = ₹1,00,000, thus, if you bought Bitcoin at ₹2,00,000 and sold it at ₹3,00,000:
Tax equals ₹30,000.
This is where reporting this accurately becomes crucial when filing crypto taxes.
When would one file their crypto taxes?
Filed concurrently with your regular income tax are crypto taxes. By 31st July each year, you have to:
- Figure your overall gain from all crypto sales.
- List it on your income tax return.
- Pay taxes on it either before or after filing.
Records You Should Have On Hand
Gather these prior to filing crypto taxes:
- Documentation of every cryptocurrency purchase and sales
- Purchase date and selling date
- Gain or loss in every trade
- TDS certificates should one percent be deducted from
- Exchange statements (akin to those from WazirX, CoinDCX, etc.)
Where within ITR should one report?
Use the “Income from Other Sources” section of your income tax return (ITR) when filing crypto taxes. Add every crypto gain right there.
Should you be a daily trader—buying or selling—it could be categorized as “business income.”
Advice for Perfect Filing
- Use Online Crypto Tax Calculator Tools
- Maintaining accurate records helps one avoid depending just on exchange summaries.
- File early to stay out from under rush.
- If you’re unsure, see a CA who knows cryptocurrencies.
- Don’t overlook cryptocurrency income; penalties can be rather expensive.
Thoughts on Last Notes
Indian tax law now incorporates filing cryptocurrency taxes. Ignoring it now could cause problems down the road. Although the procedure seems fresh, if you keep records and honestly report everything, it is not difficult. Being ready and correctly filing your taxes is wise as cryptocurrency gets more popular.
Therefore, if you made money from cryptocurrencies this year, treat it seriously and record it correctly.