Information, codes, and tokens that are present in digital form and maintained by a decentralized system for the transactions are called Cryptocurrency. Since there is no central authority that is involved in the maintenance of the cryptocurrency, investors can store, trade, and transfer cryptocurrency according to their own needs.
Cryptocurrency has been in the noise for a fair amount of time now. The term ‘crypto millionaires’ is thrown around more than anything now. Cryptocurrency is known to give lucrative returns but also it is one of the most volatile investment instruments present in the market.
Cryptocurrency tax in India
Just like any other financial instrument, cryptocurrency also has its tax policies set by the Indian government just recently. The government has proposed certain tax policies for cryptocurrency in the 2022 budget.
Some important points from the tax policies proposed by the government are:
- According to section 115BBH, all tax gains from the transfer of any kind of virtual digital assets are at 30% without allowing deductions for expenses nor setoff for any loss.
- Apart from this, a 1% TDS deduction on all transfers of virtual digital assets was also introduced.
- No deductions will be allowed from the sale price of the crypto except the cost of the purchase.
- No setoffs or adjustments for the loss incurred from the transfer of cryptocurrency will be allowed against any other income stream.
All these rules and regulations set might not be easily understandable for the tax calculation. Therefore we have introduced a cryptocurrency calculator by Koinx to help investors calculate tax with the relevant tax policies for crypto in India.
How to Use the Cryptocurrency Tax Calculator?
KoinX Cryptocurrency tax calculator is an easy and seamless tax calculator to use. Here are the steps to using a calculator for cryptocurrency tax calculations:
- Sign up on the KoinX Cryptocurrency tax calculator.
- 6 of the leading crypto exchanges in India are already integrated with the tax calculator tool.
- If your exchange platform isn’t available then you can directly download the transaction data from the exchange and Upload the CSV files.
- KoinX will calculate your capital gains and prepare a ready-to-download tax report that you can use to report your crypto income.
- Your capital gains will be calculated by the calculator and the tax report will be prepared.
- Download your ready-to-go tax report and you’ll be ready for your crypto tax filings.
Benefits of Cryptocurrency tax calculators
These ready-to-download Crypto tax reports will help you remain efficient with investors’ tax filings and make no mistakes. Investors will be able to see their realized and unrealized profits across all crypto exchanges, thus streamlining their crypto tax management.
KoinX’s tax calculator is one of the easiest-to-use calculators for crypto tax calculations. It helps to calculate the cryptocurrency tax without time-consuming and complicated processes. It applies all the applicable tax provisions to the transactions and investments made by the investor. And as an end product, it provides a readable report for tax calculations for investors to file their taxes.
Tax calculation on different provisions
Some people have started receiving salaries as cryptocurrencies in India. With the growing number of investors in Crypto, Employers in a lot of projects have started giving cryptocurrency as remuneration. This income stream of salary as cryptocurrency will be taxed within the salary slabs according to the applicability.
Taxes on capital gains earned by the trading of cryptocurrencies will be taxed under the tax policies for cryptocurrencies. It is taxed at 30% on profits without deductions for any other cost except the cost of purchase.
Investors might also be due taxes on crypto even if they are facing losses in net total. Tax on lending incomes is also one of the different provisions through which a person is taxed. It is a very popular trend for investors lending crypto who want to hold it for the long term. An investor earning profits using this method will be taxed based on the actual receipt which is based on the value of crypto in Indian rupees and is then considered as income from other sources.
There are a lot of things that are still to be cleared in the cryptocurrency industry. To a lot of investors, cryptocurrency and blockchain technology feels like an alien topic.
The government has proposed a set of policies on cryptocurrency tax applicability recently. Anyone who has been investing, earning, or trading cryptocurrencies should use the cryptocurrency tax calculator to get an exact idea of how the tax regime is going to work in this field.
The clash between the RBI and the government to accept crypto fully might take a few more years leading to some years with some strong strident tax policies.