Taxation on Cryptocurrency: Guide To Crypto Taxes in India 2024

Cryptocurrency, once the domain of tech enthusiasts and early adopters, has burst into the mainstream in India. As more individuals and businesses embrace this exciting new asset class, it’s crucial to understand the tax implications involved. Navigating the world of crypto taxes can seem complex, but this guide will simplify things for you.

1. Classification of Crypto in India

The Indian government considers cryptocurrencies as virtual digital assets (VDAs), falling under the purview of the Income Tax Act. This means any income or gains derived from crypto activities are subject to taxation.

2. Taxable Events

There are several situations where you might incur taxes on your crypto holdings:

• Capital gains from trading: Selling crypto for a profit attracts a 30% flat tax (plus 4% cess), similar to gains from stocks or securities.
• Income from mining/staking: Rewards earned through mining or staking crypto are treated as business income and taxed at regular income tax rates, depending on your tax bracket.
• Gifts/airdrops: Crypto received as gifts or through airdrops are considered income and taxed at 30% if their value exceeds Rs. 50,000 in a financial year.
• P2P transactions: Although currently exempt, it’s advisable to maintain records of P2P transactions for potential future tax reporting needs.

3. Calculation of Capital Gains

To calculate your capital gains tax, deduct the cost of acquisition (buying price) from the selling price. The resulting net gain is subject to the 30% tax rate.

4. Record Keeping

Maintaining meticulous records of your crypto transactions is crucial for accurate tax reporting. This includes:

• Dates and amounts of all crypto purchases and sales
• Wallet addresses involved in each transaction
• Cost of acquisition for each crypto asset
• Records of mining/staking rewards
• Gift/airdrop details

5. Reporting Crypto Income

You must report your crypto income in your ITR (Income Tax Return) under Schedule VDA (“Profits and Gains from Virtual Digital Assets”). Ensure you have all your records organized and categorized as capital gains, business income, or other income as applicable.

6. TDS on Crypto Transactions

From July 1, 2022, a 1% Tax Deducted at Source (TDS) applies to cryptocurrency transactions exceeding Rs. 50,000 on exchanges or peer-to-peer platforms. The TDS is deducted at the time of purchase or sale.

7. Important Updates for 2024

Gift tax on crypto exceeding Rs. 10,000: Starting April 1, 2024, gifts of crypto exceeding Rs. 10,000 will be subject to a 20% gift tax in India.

Potential changes in TDS rules: The government may further refine the TDS regulations for crypto transactions in the future. Stay informed about any updates.

8. Professional Help

While this guide provides a basic overview, seeking professional help from a tax advisor specializing in crypto can be valuable, especially for individuals with complex situations or high volumes of transactions.

For appropriate cryptocurrency engagement, one must comprehend and abide by India’s crypto tax laws. With careful planning, record-keeping, and potentially, professional guidance, you can navigate the tax landscape confidently and maximize your crypto journey in India.

Crypto Tax Landscape with CoinDhan; Taxation on Cryptocurrency

Embracing the exciting world of cryptocurrency shouldn’t be complicated by tax anxieties. At CoinDhan, we understand the complexities of crypto taxes and are committed to supporting your journey every step of the way. Here’s how we can help:

• Stay Informed: Our blogs and articles stay updated with the latest news and regulations, demystifying crypto taxes and keeping you prepared.
• Secure Record-Keeping: CoinDhan’s transaction history feature simplifies record-keeping for accurate tax reporting.
• Expert Insights: Our dedicated support team is on hand to answer your crypto tax questions and provide guidance.
• Tax Software Integration: We are actively exploring partnerships with leading tax software providers to offer seamless crypto tax reporting solutions.

In the end, at CoinDhan, we support ethical and knowledgeable cryptocurrency usage. You can confidently explore the digital future and make the most of your cryptocurrency journey in India by combining your proactive grasp of crypto taxation with our industry expertise and user-friendly platform.