Cryptocurrencies are digital assets, it’s a time long since crypto was introduced in the market. When initially it was introduced people were excited to use and earn profit from it. Many people invested and earned profit as well. But as time has passed people have gained a lot of knowledge about it. People still have the interest to invest in this digital money. Many people have this mindset that whenever they invest in anything they are gonna earn twice the profit of how much they have invested, but it’s the 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 for the government to keep numb? Yes, the government has its own rules, the government will also earn with investors, yes now we don’t have to take the brain storming sessions its easy to think and analyse as well , the only legal way to earn for the government is , TAX. Yes tax is the medium to earn with the investors. As revealed in the union budget, profits from trading in crypto and other virtual assests such as non-fungible tokens[NFTS] will be taxed 30% rate in April. This would apply to all virtual digital asset [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. The first and most important thing to remember is 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 transfer mean, it means that SALE, EXCHANGE, RELENQUISH. Yes this is how you will be taxed if u make any of these transfers. If u are selling ur bitcoin to someone at that time tax is imposed on your transaction , if u exchange your investment to somebody, and then relinquish it, relinquish means surrender, u gave your asset to someone without earning ur profit still you have to pay your tax 30%. In all these conditions you have to pay tax 30% its MANDATORY according to the rules of government.
Furthermore, for every transaction involving crypto and other virtual assets, 1%of tax will be deducted at 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%tax on the proit.
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 but 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.