How cryptocurrency investors will be taxed from April 1

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Income tax calculator: From 1st April 2022, a lot of income tax rule changes announced in Budget 2022 will get implemented across nation. New income tax law on cryptocurrency and other digital assets are one of them. According to Union Budget 2022, gain on digital assets including cryptocurrency like bitcoins will be taxed flat 30 per cent whereas there will be 1 per cent TDS and gift tax under certain conditions to be paid by the receiver of digital asset as gift.

Speaking on cryptocurrency tax in India getting implemented in new financial year; Mumbai-based tax and investment expert Balwant Jain said, “From 1st April 2022, all digital asset investors will have to pay flat 30 per cent tax on one’s income on digital assets. Apart from this, there will be 1 per cent TDS to be deducted by the purchaser of digital assets. 1 per cent TDS will have to be deducted on the purchase value of the transaction. However, this TDS rule will become applicable from 1st July 2022. Apart from this, from 1st April 2022, definition of property has been changed to include digital assets. Any gift including digital asset received from non-specified relative will be considered as income if the aggregate value of all gifts become more than 50,000 in single financial year.”

Balwant Jain said that from next financial year, a taxpayer is advised to include gift amount of the digital assets as well while calculating the net gift amount accepted by non-specified relatives.

Echoing with Balwant Jain’s views; Sujit Bangar, Founder at Taxbuddy.com said, “The gain on sell of cryptocurrency would be taxed at 30 per cent tax rate. Only deduction from sell consideration can be ‘cost of acquisition of cryptocurrency’. There won’t be any other expenses allowed to be deducted. Due to no set off of loss from other sources of income, it will become very challenging to have a net profitable trade in cryptocurrency. This taxation would certainly impact post tax returns of cryptocurrency transactions.”

On how TDS will be levied on digital assets like cryptocurrency, bitcoins, etc., Sujit Bangar of Taxbuddy.com explained, “TDS at the rate of 1 per cent has been proposed for transaction involving cryptocurrency. Important point to note is that, we may sell cryptocurrency at profit or loss but TDS at the rate of 1 per cent would certainly happen. We can claim refund of TDS done on transaction involving loss. Therefore, it would be recommended to file income tax return if you have entered into transactions in cryptocurrency.”

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