Cryptocurrencies are digital assets, it’s a long when crypto was introduced in the market. When initially it was introduced people were excited to use and earn profit out of it. Many people invested and earned profit as well. But as time has passed people have gained a lot of knowledge about it. People are still have interested to invest in this digital money. Many people have this mindset that when ever they invest in anything they are going to earn twice the profit of how much they have invested, but it’s a myth that you will earn twice what u have invested, this is very well proved by cryptocurrencies. After all, it’s the market and other things that decide the rates and profits hence, people should change their mindset of earning too much profit after investing.
Now when people are investing in digital money then how is it possible to Government to keep numb? Yes, Government has its own rule & Government will also earn with investors. Off-course we don’t need a brainstorming session here & it’s easy to think and analyze that the only legal way to earn for the government is by introducing new TAX laws. As revealed in the union budget, profits from trading in crypto and other virtual assets such as non-fungible tokens[NFTS] WILL BE TAXED AT A FLAT 30% rate beginning in April. This would apply to all Virtual Digital Assets [VDA] and their earnings from Bitcoin to Non Fungible Tokens [NFTS].
Now it’s important to learn how will this tax work on digital assets. First of all, the most important thing is to remember that it will work only when we make any kind of transfer, now this is not a normal transfer as we do in daily life. What does actually normal transfer mean- SALE, EXCHANGE, RELENQUISH. Yes, this is how you will be taxed if you make any of these transfers. If you are selling your Bitcoin to someone that tax is imposed on your transaction, another type is that if you exchange your investment with somebody, and then relinquish, relinquish is surrendering your asset to someone without earning your profit still you have to pay your tax 30%. IN ALL THIS CONDITION YOU HVE TO PAY TAX 30% it’s MANDATORY according to the new TAX rules.
Furthermore, for every transaction involving crypto and other virtual -assets, 1%of tax will be deducted at the source [TDS]. For example, if a crypto investor buys crypto for RS.10,000 and sells it for RS.15000, netting a profit of RS 5000, the investor will face a 30%t tax on the profit.
Meanwhile, with only a few days left for the new tax systems to be effective, numerous investors are reportedly booking profits, rejigging their portfolios, or transferring their crypto assets to private wallets outside of India.
Crypto investors should be aware of a few fiscal regulations for the years 2022-2023:
1: After accounting for all bitcoin transactions for the year, no tax will be required to be paid if an investor is losing money with no earnings.
2: Furthermore, investors will not be taxed if they purchase a crypto asset that has gained in value but is unable to sell it due to market conditions. The profits will not be taxed until they sell it for a profit.
3: When calculating taxes. losses from one type of VDA cannot be offset between gains from other VDA transactions. This means that investors will have to pay a 30% tax on any gains made, while losses will not be deducted from the final taxation amount when trading other tokens. As a result, if u make a profit on one token but lose on another, you must still pay 30% on the profitable token.
4: TDS will be imposed on July 1 and will be deducted from the whole transaction value, regardless of whether the investor makes a profit or loss.
5:Experts and business owners will be unable to deduct gains or losses from their main income and cryptocurrency revenue.