Rules of Taxation on Crypto Gains in India

India has been one of the most prominent countries to have a yet-to-be determined stance on cryptocurrencies. As of now, the only answer that seems to be forthcoming from the government is that cryptocurrencies are not legal tender in India. But what does it mean for those who invest and trade in crypto? How does taxation work out for them? Find out more about this here!

In this article, we are going to throw some light on how tax laws apply to your cryptocurrency trading or investing activities. According to Indian income tax laws, profits from any kind of speculative transaction (buying and selling) are treated as capital gains subject to taxes. The capital gains tax rate in India is currently at 15%. Capital gains are calculated on your total capital gains, and these capital gains were well maintained by crypto tax software. There are many best crypto tax software that are present these days and help people by maintaining the record of their crypto profits or loss.

What are crypto gains taxes ?

Cryptocurrency gains taxes are a topic that many people often wonder about, but do not have much information on. While the specifics of how cryptos work can be very difficult to understand, crypto gains taxes are easy to wrap your mind around. In fact, they might be one of the easiest ways to determine whether you owe any taxes on your profits.

When you buy or sell Bitcoin, you expect to make a profit by receiving more for what you sell than what you paid for it. Like any type of investment, gains from cryptocurrencies are taxable. A gain refers to the difference between your proceeds and your basis in a cryptocurrency.

What are the rules of crypto taxation ?

When it comes to crypto profits, the income tax department has categorised them as ‘income from other sources’ and the applicable category would vary based on how you earned your crypto.

For example, if you have mined your own Bitcoins, it would be included in the income from business and profession and taxed accordingly, since there is a profit involved in it. Similarly if you have simply bought some Bitcoin or other cryptocurrencies with cash and sold them later for a profit. However, if you received any crypto as an income through airdrops or forks (e.g. Bitcoin Cash, Bitcoin Gold etc.) it would be classified as ‘capital gains from transfer of assets’ and taxed accordingly.

These taxes on crypto gains are determined by how long you hold those assets. Specifically, profits are taxed as short term if you held them for less than a year and long term if you held them for more than a year.

It is important to point out that India has still not clearly stated whether cryptocurrency exchanges are allowed in the country or not. And hence, there is no clarity on how crypto-to-crypto trades would be taxed. The tax department considers such crypto trading activities as a trade of goods, and currently, there is a Goods and Services Tax (GST) at 18% on all crypto transactions in India.

There are many sites and software which are available nowadays to help newcomers, among which Binocs hold a good position. Binocs is a crypto platform which helps you in the field of cryptocurrency.