If you have invested in Cryptocurrencies like bitcoins, Ethereum, and Ripple and are planning to sell it after you’re done with the investment, then there is a capital gain tax implication. But how much tax do you need to pay? This guide will answer these questions and more.
How Do You Calculate the Capital Gains Tax on Crypto Assets in India?
The very first step to calculate crypto tax in India is to figure out your income from crypto. Remember that cryptocurrency investments are considered assets and profits from these assets are treated as income. To calculate your crypto-related capital gains, you’ll need to add up all your purchases, subtract the total of all your sales, and then subtract again the amount of any expenses incurred during the year.
Then you’ll have to calculate the actual capital gains made on these assets by applying a tax rate of 20% on the long-term capital gains. In simple words, this is your profit minus taxes paid during the holding period. The result is how much money you actually pay taxes on. This should be the amount you enter on your tax return.
What if You Haven’t Sold Your Crypto but Have Received Income Through It?
This is 렛저 디바이스 where cryptocurrency taxation becomes a bit complicated. If you’ve received income in the form of cryptocurrency, then you will have to report it at the time of filing your return and pay your taxes on it. However, these are not considered ‘profits from sale’ and are taxed differently as ‘Income from Other Sources’.
One thing to remember here is that if you have received cryptocurrency payments through a mining pool then this should be added as other taxable income. This is because mining pools don’t transfer the mined cryptocurrency to your account, but replace it with an equivalent value in the form of fiat currency or major cryptocurrency such as Bitcoin. This can be considered as ‘income from other sources in India.’
If you have imported coins for mining purposes, then you have to declare them and pay customs duty on them. The same goes for any equipment that you’ve purchased for mining purposes as well.
How to Report Capital Gains within the Indian Cryptocurrency Taxation System?
Taxes on Crypto gains should be reported through Form 49A, which is part of your income tax return form. Don’t forget to also deduct any capital losses that you’ve incurred before calculating your total profits. The amount here will be the amount that you pay taxes on.
Conclusion
As pointed out above, until the Indian government makes a decision on how Cryptocurrency is going to be treated, it might be difficult to determine the exact taxability and how to report your income from cryptocurrency within the current framework of Indian taxes. This is why it’s important for regular crypto users to keep a record of all their transactions along with the prices at which they were buying and selling their cryptocurrencies for tax purposes.
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