How is crypto taxed in India?

In India, cryptocurrencies are classified as virtual digital assets and are taxed. But how ? Cryptocurrencies in India is taxed in the following manner :

• All investors, whether private or commercial, who transfer digital assets during the year are liable to the crypto tax.
• Profits from cryptocurrency trading are taxed at a rate of 30% (plus 4% cess) under Section 115 BBH.
• Profits from cryptocurrency trading, selling, or swapping will be taxed at a flat 30% (plus a 4% surcharge), irrespective of whether the revenue is classified as capital gains or business income.
• TDS of 1% will also be imposed on sales of crypto assets worth more than Rs 50,000 (or RS10,000 in some situations).

How to calculate tax on crypto in India?

If you buy, sell or transfer any type of cryptocurrency in a year, you'll have to pay a 30% tax rate on any gains you make. Irrespective of the factors like - if you’ve held the cryptocurrency for a short or long time, or whether it's for personal or business use. The tax rate will always be the same.

For example : Let's say you invested ₹500,000 in cryptocurrency at the beginning of the fiscal year 2022. By the end of the year, you sold your cryptocurrency for ₹1,000,000, earning a profit of ₹500,000. With a flat 30% tax rate on cryptocurrency gains, you would owe ₹150,000 in taxes on your earnings from the cryptocurrency investment for that fiscal year.

What is a crypto tax calculator?

Calculating taxes can be a tedious process and that’s where crypto tax calculators enter the game.

Crypto tax calculators help you to keep a track of the tax that you owe on your transaction. In order to compute your gain or loss, these calculators consider the amount of cryptocurrency you bought or sold, as well as the prices at which you bought or sold it.

How to use crypto tax calculators?

To get access to these calculators all you have to do is fill in the information ie. (have to list the info needed) and that's it, now, just sit back and let the calculator do its work.

Benefits of using crypto tax calculators

• Calculate taxes in minutes
• Easy to use
• Saves you from the hassle of calculating taxes manually

How to lower crypto tax liability?

Here are a few steps that you can use to lower your tax liabilities :

• Hold your crypto currency for more than a year
• Some countries allow tax deductions for expenses related to crypto currency, take advantage of that.
• Use tax loss harvesting
• Maintain detailed and accurate record of your transactions
• Consult a tax professional