Crypto Taxation In The 514: What You Need To Know – US tax season is upon us again and with all eyes on bitcoin, it’s more important than ever to file your taxes correctly. If you bought, sold, traded or used crypto in 2020, you may have to pay taxes on your gains.

This guide highlights what you should know before entering your crypto fees with links to other helpful resources and forms. It is provided for informational purposes only and is not intended as tax advice and we recommend that you consult an independent tax advisor when preparing your tax returns.

Crypto Taxation In The 514: What You Need To Know

Crypto Taxation In The 514: What You Need To Know

First things first: trade history. makes it easy to download your transaction history directly from your Wallet and Exchange account. You must mention this when filing.

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Just log in, choose the crypto you want (Bitcoin, Ethereum, Stellar, etc.) and click “Download”. It’s as easy as that.

. If you used crypto in 2020, you will likely pay one or both of these fees, depending on what you did.

If you’ve filed with the IRS in the past, you may be familiar with income tax. But what is capital gains tax? Capital gains are the calculated profit or loss once you trade or sell your crypto.

Filing your crypto taxes is complicated. You may be tempted to treat it yourself, but when in doubt, consult a professional. While there are many to choose from, has partnered with Koinly and Lukka Tax to make your 2020 crypto filing a little easier.

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Outside the US? Koinly also offers special reports for other countries. Visit their website for more information on crypto fees.

The material contained herein is provided for informational purposes only. It does not take into account your personal circumstances and is not delivered as tax, legal, accounting and/or any other type of advice.

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Crypto Taxation In The 514: What You Need To Know

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I Find Out What Crypto Millionaires Are Buying (Next 1000x Altcoins) Today I Find Out What Crypto Millionaires And Billionaires Are Buying In This Bear Market Are Crypto Taxes Paying Scared as a new crypto investor? Don’t worry, you are not alone. Despite facing some of the highest taxes in the world, millions of Indian investors are still investing in Crypto. But with the Income Tax Department’s (ITD) increased scrutiny of Bitcoin and other cryptocurrencies, it is imperative to understand how India’s crypto tax laws work. That’s why we’ve put together the ultimate crypto tax guide for 2023 to help you navigate the world of crypto taxes and stay compliant with the ITD.

Crypto Taxation In The 514: What You Need To Know

From understanding the tax implications of buying and selling cryptocurrencies to filing your tax returns, our guide covers everything you need to know about crypto taxes in the India. So, sit back, relax, and let us guide you through the crypto fees in India and out.

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The Indian government did not have a definitive stance on classifying Crypto or taxing them before 2022. However, during the 2022 budget session, Finance Minister Nirmala Sitaraman introduced Section 2(47A) into the Income Tax Act, which defines Virtual Digital Assets. VDAs) in detail and covers all types of crypto assets, including cryptocurrencies, NFTs, tokens, and others. You have to pay a 30% tax rate (plus applicable surcharge and 4% cess)​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​front 4.) Any profits generated from crypto transactions.

According to the ITD, if you have received Crypto (sold Crypto or traded it for another crypto) or earned Crypto (received Crypto through airdrop or stake rewards), you must pay crypto fees in​​​​ India. Unlike other asset classes, there is no tax advantage to holding Crypto for the long term. You have to pay taxes on crypto income no matter how long you keep it.

Additionally, you may now face Additional Tax at Source (TDS) under section 194S of Section 2(47A) on transfer of crypto assets on or after July 1, 2022.

Now as shown in the ledger above, two allocations were made. So let’s look at the benefits of each receiver separately.

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Now these gains will be taxed at a flat tax rate of 30%, excluding withholding tax.

If you are thinking of avoiding some of your transactions on your tax return to the Income Tax Department (ITD), there is a real answer. The ITD has full access to your records and can easily check your tax report against their database to identify discrepancies.

In India, the ITD monitors crypto-related transactions, including the amount of crypto assets held in wallets and exchanges, by implementing Know-Your-Customer (KYC) policies. Local exchanges in India must also adhere to this policy.

Crypto Taxation In The 514: What You Need To Know

In addition, several global initiatives require private companies to share their customer data with tax authorities around the world to combat criminal activities such as money laundering. Using blockchain analytics tools, tax authorities can trace the movement of crypto assets between exchanges and wallets, providing insight into the private holdings of Indian taxpayers.

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The ITD did not mention any term like “capital gains tax” in its official notification. Instead, they have implemented a flat income tax rate for all retail investors, traders, or individuals who transfer crypto assets in a given financial year without distinguish between short-term and long-term benefits. If you engage in any of the following transactions, you may be subject to a flat tax rate.

You must pay a tax rate of 30% (plus applicable surcharge and 4% cess)​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ The 30% crypto tax rate will be the same regardless of the type of income i.e. it does not matter whether it is investment or business income and regardless of the period it’s property.

While you pay a flat 30% tax on your profits, determining your cost basis is the first step in figuring out what you owe.

To calculate capital gains, you need to know the selling price (yield) and buying price (cost basis) of the Crypto you sold or transferred. For example, if you sell ETH for ₹ 2, 00, 000, your selling price or income is ₹ 2, 00, 000.

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However, determining your purchase price can be more complicated if you have purchased the cryptocurrency multiple times. In this case, you have to decide which units were sold first. In India, you can use the First-in First-out (FIFO) method of accounting as advised by ITD, which means that the earliest acquired units are sold first .

Let’s say you invested INR 80,000 in Crypto in FY2023 and sold the Crypto for INR 1,20,000, resulting in a profit of INR 40,000. Now as an investor , you are subject to a flat 30% crypto tax , you will have to pay INR 12, 000 (plus surcharge and cess)​​​​as tax on the crypto income for that fiscal year.

If you buy or sell Crypto, you will only be taxed on the income or profit you make during the transaction. So if you hold on to your Crypto and its value goes up, you will only have to pay taxes on those unrealized gains once you decide to sell it.

Crypto Taxation In The 514: What You Need To Know

After calculating your gains and losses from the two transactions, your net income from the above transactions will be INR 1 Lakhs, the profit earned from the Bitcoin transaction.

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For FY 2022-23, the applicable tax rate for profit is 30%. So, you will have to pay INR 30,000 (plus surcharge and cess) as tax on your crypto profit.

In respect of virtual assets, no deductions (other than cost of acquisition) are allowed against any expenditure or allowances. Further, clause 115BBH of Section 2(47A) clarifies that if a person incurs losses from the transfer of virtual assets, such losses cannot be set off against any other income.

Let’s say, if you get a net loss of Rs 2 Lacs from selling Crypto during the year, your tax liability for crypto transfer will be zero for this year.

However, this loss of Rs 2 Lacs cannot be carried forward to the next financial year and used to offset it in future

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