"Gifts of crypto are not taxed in the hands of the recipient if they are close relatives such as spouse, parents, children etc. No expenses such as electricity cost or infra cost can be included in the cost of acquisition," he said.Īre there taxes on gifting cryptocurrency? "The cost of acquisition for crypto mining will be considered as zero for computing the gains at the time of sale. According to Polepally, there should be no TDS implications on crypto exchanges in the case of mining. What if someone is mining cryptocurrencies? Essentially, mining is a process where the person is generating new coins. If an individual engages in a peer-to-peer transaction on an Indian exchange, the exchange itself will be responsible for deducting and depositing TDS with the government," said Shekhar. "Indian exchanges dealing with virtual digital assets are mandated to comply with TDS provisions. Things to remember while filing your income tax returns as deadline closes in The most common transaction on any exchange is where a person buys and sells any cryptocurrency to another person, essentially a transfer of the digital asset. If the seller has not filed the ITR, then TDS will be deducted at a higher rate of 5 per cent, according to Avinash Shekhar, CEO and founder of TaxNodes, a crypto tax startup. The liability to deduct the TDS (tax deducted at source) at one per cent rate lies with the person purchasing the virtual digital assets from an Indian resident. Other than this tax, one per cent TDS will also apply on sale of crypto assets worth more than Rs 50,000," said Polepally. "Gains from trading, selling or swapping cryptocurrency will be taxed at flat 30 per cent (plus a 4 per cent surcharge) irrespective of whether the income is treated as capital gains or business income. The tax rate is also the same for short-term and long-term gains, and it applies to all types of income earned by the investor, noted Avinash Polepally, senior director, crypto business head, Cleartax. The crypto tax applies to all investors-private or commercial-who transfer virtual digital assets during the year. In the Union Budget last year, it was announced that any income from the transfer of any virtual digital asset would be taxed at 30 per cent. Do note that from this year, people would also need to file taxes for gains made on their cryptocurrency investments. The last date for ITR filing is July 31 so there is hardly any time left. It is that time of the year when filing your income tax returns will be high up on your agenda, if not already done.
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