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Tax on Cryptocurrency in India

Income from the transfer of digital assets such as cryptocurrencies like Ethereum, Dogecoin, Bitcoin, etc., is taxed at a flat rate of 30% without allowing deduction of expenses except for the cost of acquisition. Regardless of whether the gain is a short-term or long-term capital gain, the tax must be paid by the individual who has earned any profit from cryptocurrency transactions. In addition to the tax, the individual will also have to pay a cess of 4% on the tax.

What is a Cryptocurrency Tax Calculator?

A cryptocurrency tax calculator is a tool that provides an estimate of the value of the tax that the individual is liable to pay on the gains from crypto transactions. This can be extremely helpful for investors in the cryptocurrency market.


How to Use Cryptocurrency Calculator?

Step 1: Select the tax year you would like to calculate your estimated taxes.
Step 2: Select your tax filing status.
Step 3: Enter the purchase and sale price
Step 4: Compute crypto tax

How to Calculate Tax on Cryptocurrency?

To calculate tax on cryptocurrency, you have to deduct the purchase price from the selling price of cryptocurrencies you hold and calculate 30% of the value. In addition to 30% of the tax, you also need to pay cess at 4% of the tax amount. Please refer to the example below:

Example: Taxation on Cryptocurrency

These examples calculate taxes for the FY 2022-23 for a person.

Example 1: Taxation on cryptocurrency
Purchase Price of Cryptocurrency: 50,000 INR
The selling price of the Cryptocurrency: 70,000 INR
Profit: 20,000 INR
Tax: 6000 INR
Cess: 4% at 6000 = 240 INR
Total tax liability: 6240/- INR

Example 2: Tax on bitcoin in India

Mr A purchased bitcoins worth 3Lakh (3,00,000) on May 1, 2022 and sold the bitcoins at 4Lakh (4,00,000) on May 25, 2022. How much is the tax liability on Mr A?

The tax liability on Mr A will be based on the profit earned. Here, Mr A earned 1,00,000 in profits. The flat tax of 30% will be applicable to this sum. This means that the person will have to pay 30,000/- on this tax
Further, on 30,000/- Mr A will have to pay a cess at 4% so total tax liability will be Rs.31,200/-


Benefits of Using Tax2Win Bitcoin Tax Calculator

  • Gain on bitcoin trades can be calculated in seconds.
  • Tax2win's Cryptocurrency Tax Calculator is simple to use and can be done from the comfort of your own home or anyplace else.
  • When you acquire and trade bitcoins, you get a real-time image of the taxes you owe the government.

Eligibility Criteria for Using Cryptocurrency Tax Calculator

To be eligible for using this calculator, you must have at least one virtual digital asset like cryptocurrencies (Bitcoin, Dogecoin, Ethereum, etc.) or NFTs. You must know the cost of acquisition and sale value of the digital assets that you are holding.


Conclusion

Tax2win’s cryptocurrency calculator is a handy tool that makes the job of calculating crypto tax liability a lot easier. The calculator allows you to calculate the income tax and gain/loss for your cryptocurrency investments.

Frequently Asked Questions

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What is Cryptocurrency?

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A cryptocurrency is a type of digital asset or a form of digital money that is decentralised and based on blockchain technology. Although you may be aware of the popular & well-known, Bitcoin and Ethereum, there are over 17,000 distinct cryptocurrencies in use.


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What is a virtual digital asset?

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A virtual asset is a digital representation of value that can only be accessed over the internet. It is saved and transacted via special software, mobile apps, or computer programmes.


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How To Use Tax2Win Cryptocurrency Tax Calculator?

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To use the Tax2win cryptocurrency tax calculator, all you have to do is, follow the below-mentioned steps:
  • Select the financial year
  • Enter sale value of the digital currency
  • Enter the cost of acquisition of cryptocurrency
You will see the total amount of loss/gain you have made and the amount of tax that you need to pay.

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Is there any tax on cryptocurrency in India?

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Yes, in the budget 2022, the finance minister announced that the cryptocurrency transactions will be taxed at 30% from FY 2022-23. Earlier also it was taxed but was not regulated properly. From the year 2022, all the transactions must be reported and will be taxed at the hands of the recipient.


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From when will the tax on cryptocurrency be applied?

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This amendment will take effect from April 1 2022 and will accordingly apply.


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What is the tax rate on cryptocurrency in India?

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The income gained from cryptocurrencies is taxed at a flat rate of 30%.


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Is there any TDS deduction?

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Yes, 1% TDS will be deducted. In addition to TDS deductions, gifts of digital assets are also taxed on the recipient's hands.


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Can I set off losses made in cryptocurrency?

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No, you cannot set off your losses in cryptocurrency for any other income. Also, it cannot be carried forward.


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Is NFT taxed as Cryptocurrency?

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Yes, all digital assets are taxed at a flat rate of 30%.


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I received cryptocurrency as a gift. Will I have to pay the tax?

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Yes, gifts of crypto assets will be taxed in the recipient’s hands

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