How to Calculate Crypto tax in India 2023?
The tax consequences of purchasing, holding, or selling cryptocurrencies are considered as capital gains or losses in India, much like those associated with traditional assets. Depending on how long an item is held, there are different tax rates in India for capital gains on bitcoin trades. Long-term capital gains (assets kept for more than 36 months) are taxed at a flat rate of 20% with the indexation advantage, whereas short-term capital gains (assets held for less than 36 months) are Crypto tax at the individual’s relevant income tax rate.
It’s crucial to remember that the Indian government has not yet released any precise rules or laws on the taxation of cryptocurrency transactions; thus, for the most recent information, it is advised to contact an accountant or the Indian income tax department.
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How to Calculate Crypto tax?
You must figure out the cost of acquisition (the amount you paid to buy the cryptocurrency), the fair market value (the amount you paid to sell the cryptocurrency), and the holding period in order to compute the capital gains tax on cryptocurrency transactions in India (the length of time you held the cryptocurrency).
- Short-term capital gains tax: If the holding period is shorter than 36 months, the capital gains tax is determined by subtracting the cost of acquisition from the fair market value and multiplying the result by your relevant income tax rate.
- Example: Your short-term capital gain would be 5,000 INR if you bought 1 ETH for 10,000 INR and sold it for 15,000 INR after six months (15,000-10,000). Your capital gains tax would be 1,500 INR (5,000 x 30%) if your income tax rate is 30%.
- Long-term capital gains tax: If the holding period is more than 36 months, the tax is based on the 20% difference between the indexed cost of purchase and fair market value. Using the cost inflation index published by the Indian government, the indexed cost of procurement is determined while accounting for inflation.
- Example: Buying 1 ETH for 10,000 INR and selling it for 15,000 INR after three years would increase.
Crypto tax india
Your crypto tax india would be 1,000 INR (5,000–12,000 x 20%), which would be due if the indexed cost of acquisition was 12,000 INR.
A tax expert or the Indian income tax authority should be consulted for the most recent information and advice as the laws and regulations regarding cryptocurrency tax in India are not yet clear and are subject to change.
Importance
Several major elements that highlight the significance of tax calculation and payment on bitcoin transactions are as follows:
Legal compliance: In the majority of nations, paying taxes on bitcoin transactions is required by law, and failing to do so may result in fines and penalties.
Avoiding audits and legal issues: Providing accurate tax reporting and payment for bitcoin transactions will assist in avoiding any audits or legal issues that may result from underreporting or failing to provide accurate tax reporting.
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Cryptocurrency portfolio: Binocs Services
Binocs is a one-stop shop for all things tax-related to cryptocurrency. Users must integrate their transactions on Binocs through API or CSV formats, bearing in mind Australian laws and regulations, whether they need to sync their transactions from an exchange or have saved their crypto assets in a wallet and your Cryptocurrency portfolio management.
