Taxation On Cryptocurrency
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Guide To Crypto Taxes In India
Cryptocurrencies are emerging as prominent financial innovation, offering decentralised and borderless transactions. In India virtual digital assets (VDAs) such as cryptocurrencies, NFTs, etc. are now subject to taxation, whose capital gains are taxable at a flat 30%. Also, TDS is deducted at 1% of sale consideration. In this article, we will learn in detail the taxation implications on virtual digital assets.
- Income from the transfer ( trading, selling, or swapping ) of virtual digital assets such as crypto and NFTs will be taxed at 30% (plus 4% cess) irrespective of whether the income is treated as capital gains or business income.
- Section 194S levies 1% Tax Deducted at Source (TDS) on sale consideration if the transactions exceed ₹50,000 (or even ₹10,000 in some cases) in the same financial year.
- Under section 14 of the Income Tax Act, 1961, income from VDA can fall into the below heads of income:
Non-Applicability of 194S TDS on VDA:
- It is important to note that TDS under Section 194S is applicable at the time of purchase of VDA from an Indian Tax Resident only.
- Thus if you are Trading in an International exchange, DEX, you will be interacting with a non-resident or non-resident entity, then one can take a stand that Section 194S is not applicable.
Loss from Crypto Transactions
What are Cryptocurrency
1,500 virtual currencies, such as Bitcoin, Ethereum, Litecoin, Dogecoin, Ripple, Matic, etc., are traded in the digital currency world. The investment and trading volume of cryptocurrencies has increased multifold.
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