Crypto Gains before April 2022 to be taxed

Gains from crypto investments before April 2022 too will be taxed

Amit Srivastava

Crypto investors will have to pay taxes for their gains made during the financial year 2021-22. The Central Board of Direct Taxes (CBDT) has clarified that profits made during the current financial will not be tax-free.

CBDT clarified this after it came to know that a section of investors was under the impression that crypto gains made before April 2022 will be tax-free.

CBDT Chairman JB Mohapatra informed a new agency that the taxability of the crypto-currency is certain for this financial year too. “Crypto investors should know that the transactions are done before April 2022 will not be tax-free," Mohapatra was quoted as saying to a news agency.

Earlier, the government of India moved one step closer to accepting cryptocurrencies. The Reserve Bank of India will also launch its own digital currency in the next financial year, said Finance Minister Nirmala Sitharaman in her budget speech on Tuesday.

After a roller-coaster journey, cryptocurrency has become legal in India with the announcement of a tax on income from the transfer of digital assets. Now, people can invest as the decision has removed any uncertainties about the legal status of digital transactions.

The decision also led Bitcoin to gain around 4.5% during the day. Even other currencies too saw a positive move.

During the budget speech, finance minister Sitharaman announced a 30 percent tax on any income or profit from the transfer of virtual assets. However, there will be no deductions or exemptions. Now, it can be concluded that cryptocurrencies and non-fungible tokens have been brought under the tax net.

In a statement Darshan Bathija, co-founder and chief executive officer of Vauld, a crypto exchange platform based in Singapore said, “Imposing a tax on any income from cryptocurrencies means the ban is out of the table now.”

Sitharaman accepted that there has been a phenomenal increase in transactions in virtual digital assets and the magnitude and frequency of these transactions forced to provide for a specific tax regime.

Even the crypto gifts will also be taxed in the hands of the recipient. In addition, there will also be a 1 percent tax deducted at source (TDS) on the payments made for the transfer of digital assets. At the same time, any loss made on the transaction of such digital assets cannot be set off against any other gain.

But the fat tax rate for gain on cryptocurrencies is also looked to discourage people from making investments, especially retail investors. Industry expert believes that the intention could be to prevent people from speculation while investing in digital currency. But at the same time, a section of people believes that this is a positive step towards crypto regulations. 

 

FAQs on Crypto Tax in India

 

FAQs on Crypto Tax in India

 

Q. Do I have to pay taxes on my crypto?

A. Yes, you have to pay taxes at the rate of 30% on cryptos only when you sell them for profit and transfer the amount to the bank account.
Also, any payment transfer made concerning crypto transactions will attract a TDS of 1%.

 

Q. How do taxes work with crypto?

A. All types of gains arising from a crypto transaction are taxed at 30%, irrespective of your income tax slab and period of holding. 

Q. Do I have to pay taxes on overall transactions?

A. You have to pay taxes at the rate of 30% on cryptos only when you sell them for profit. In case, you incur loss in cryptos, the loss will not be adjusted with the profit earned. 

Cryptocurrency: Government imposes tax on crypto gains

India steps closer to accepting cryptocurrencies

By Amit Srivastava

Finally, the government of India moved one step closer to accepting cryptocurrencies. The Reserve Bank of India will launch its own digital currency in the next financial year, said Finance Minister Nirmala Sitharaman in her budget speech on Tuesday.

After a roller-coaster journey, cryptocurrency has become legal in India with the announcement of a tax on income from the transfer of digital assets. Now, people can invest as the decision has removed any uncertainties about the legal status of digital transactions.

The decision also led Bitcoin to gain around 4.5% during the day. Even other currencies too saw a positive move.

During the budget speech, finance minister Sitharaman announced a 30 percent tax on any income or profit from the transfer of virtual assets. However, there will be no deductions or exemptions. Now, it can be concluded that cryptocurrencies and non-fungible tokens have been brought under the tax net.

In a statement Darshan Bathija, co-founder and chief executive officer of Vauld, a crypto exchange platform based in Singapore said, “Imposing a tax on any income from cryptocurrencies means the ban is out of the table now.”

Sitharaman accepted that there has been a phenomenal increase in transactions in virtual digital assets and the magnitude and frequency of these transactions forced to provide for a specific tax regime.

Even the crypto gifts will also be taxed in the hands of the recipient. In addition, there will also be a 1 percent tax deducted at source (TDS) on the payments made for the transfer of digital assets. At the same time, any loss made on the transaction of such digital assets cannot be set off against any other gain.

But the fat tax rate for gain on cryptocurrencies is also looked to discourage people from making investments, especially the retail investors. Industry expert believes that the intention could be to prevent people from speculation while investment in digital currency. But at the same time, a section of people believes that this is a positive step towards crypto regulations. 

Cryptocurrency and India: A Brief History

Cryptocurrency and India: A Brief History

While Finance Minister Nirmala Sitharaman will present the fiscal budget for 2022-23, the eye will be on a policy to regulate the cryptocurrency in India. The cryptocurrency industry is eagerly waiting for a policy and regulation to build confidence among investors. So far, the journey of digital currency in India was tipsy-topsy.

With more than three million investors in India, the absence of regulation may hurt the investors, believes the crypto industry. While the central bank was advocating a complete ban, the government is now drawing a law to regulate the digital currency in the country.

At a time when the industry is expecting a robust policy to regulate cryptocurrency, digital currencies saw a sharp correction. The sudden rise and then a correction is not new in crypto trading.

History

The popularity of cryptocurrency is gaining in India with investors from tier two and tier three cities are trying their luck as early birds to make money. But the presence of digital currency is almost 9 years old in India. It was first noticed in 2013 when a restaurant in Mumbai, the financial capital of India started accepting cryptocurrency as payments. Since then, it did not look back and today, it is one of the most discussed topics among investors and financial advisors.

 

The same year, the launch of cryptocurrency exchange Unocoin was enough to understand that digital currency is going to be here. The exchange provided a platform for investors to buy and sell cryptocurrency, especially Bitcoin. The same year, Bitcoin saw a 900% rise, from Rs 60,000 to Rs 60 lakh.

 

It is then that the Reserve Bank of India woke up and realized a threat to the country’s financial situation. As there are no underlying assets of these digital currencies, the central bank issued an advisory and banned all kinds of trade. It also warned people against the use of it.

 

Following a ban and preventing banks from using their platforms for transferring money, two PILs were filed in the Supreme Court during 2013-2017. Interestingly, one PIL requested to ban cryptocurrencies in India, the other advocated to regulate it. The government acted and formed a committee in 2017-18 to look into the issues and find a solution.

The RBI decision left the nascent crypto industry in midway as prices saw sharp correction. The decision also hit the exchanges and many people became jobless overnight.

 

The committee formed by the government proposed a complete ban on cryptocurrencies. It is the Supreme Court that lifted the ban in March 2019. The circular issued by the RBI was nullified and the ban was lifted. The court said that despite the cryptocurrencies being unregulated, they are not illegal in India. The decision gave a new life to digital currency in the country and then it started flourishing. However, the government started working on it to regulate. The decision also impacted Bitcoin price and it saw over 700 percent rise within a year. Despite SC’s decision, the industry is in constant fear of a ban to date.

 

In January 2021, the government decided to introduce a bill to create a sovereign digital currency and ban all private cryptocurrencies. Again, it sent a wrong message for the industry that had seen a revival.

 

According to the Lok Sabha bulletin dated November 23, 2021, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks 'To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses'. The bill was slated to be tabled in the winter session of the Parliament but has been once again deferred. 

Cryptocurrency-Turkey

Turkey cryptocurrency market dominated by men, reveals study 

                 The country stands among the top five crypto markets in the world 

By Amit Srivastava

A new study on gender-wise knowledge of cryptocurrency conducted in Turkey revealed that more than 60% of women don’t have knowledge of digital currency and they are not using this platform as an investment tool. At the same time, around two-thirds of men have medium and high-level knowledge of cryptocurrency.

It is important to mention here that Turkey is among the top five countries in the world on the cryptocurrency market with around 5 million cryptocurrency platform accounts. Despite a good penetration, women in the country are not showing much interest in digital currency.

The Turkey government in April 2021 banned crypto as a form of payment. However, it is legal to possess or hold crypto assets. But the regulatory body of the country reiterates that a crypto is a form of evasion for capital controls and taxes.

The data obtained through a computer-aided survey by researchers Ozan Akadur and Çağla Gül in Turkey revealed that there are differences of behavioral and psychological among men and women with respect to cryptocurrency investment. While men are risk-taking, women avoid this. The study also revealed that women do not try different investment tools and this leads to lower-income. This has also resulted in a low level of knowledge about crypto. The Journal Business, Economics, and Finance accepted the study. 

Cryptocurrency

 

Price variation of popular coins during the last week:

 

Coins	Weekly % Change	Monthly % Change	Yearly % Change
Bitcoin (BTC)	▼ 3.23%	▼ 11.74%	▲ 36.79%
Ethereum (ETH)	▼ 5.15%	▼ 18.83%	▲ 180.37%
Shiba Inu (SHIB)	▼ 12.55%	▼ 26.62%	▲ 9670.79%
*Cardano (ADA)	▲ 5.23%	▲ 1.93%	▲ 345.97%
Request (REQ)	▲ 2.20%	▼ 31.06%	▲ 487%

 Top gainers of the week

Coins	Weekly % Gain
Theta Fuel (TFUEL)	▲ 12.02%
Kyber Network (KNC)	▲ 11.89%
Coti (COTI)	▲ 5.64%
Theta Network (THETA)	▲ 5.30%
*Cardano (ADA)	▲ 5.23%

Cryptocurrency Bill

Bill on Crypto unlikely during Budget Session of Parliament

 

Amit Srivastava

After the government failed to bring a bill to regulate cryptocurrency in the winter session of parliament, as per the media report, the bill is unlikely to be tabled during the Union Budget 2022-23 session. As per the sources, the government has decided to seek international support in formulating a common strategy on cryptocurrency.

While the central bank was advocating a complete ban on digital currency, the government is delaying in taking a stand, due to differences in opinions of stakeholders.

Early this week, Prime Minister Narendra Modi sought a global consensus on crypto regulations. He mentioned this during his speech at the World Economic Forum summit, held virtually on January 17. Modi said that there is a need for a uniform approach to crypto across the globe. He said that steps taken by a single country will not address the issue.

According to the media report, the government is working on levying taxes on gains from the cryptocurrency trade. As per the industry expert, the size of crypto is growing rapidly in the country and there are about Rs45,000 crore crypto asses with over 15 million investors.

The government is likely to take more time in formulating regulations in consultation with Bank of International Settlements (BIS). In the last couple of months, PM Modi had spoken at international platforms several times on digital currency, but not even once with Indian investors. 

Cryptocurrency ETF

 Cryptocurrency ETF to be launched soon in GIFT City

By Amit Srivastava

There is good news for investors exploring opportunities in cryptocurrencies as Asia’s first exchange-traded fund (ETF) will be launched by the end of this fiscal year. Investors will have one more option to enter the crypto world.  

As per the media reports, Asia’s first ETF will come up at GIFT City, a central business centre in Gandhinagar, Gujarat.

A memorandum of understanding was signed between the BSE's international arm India INX and Torus Kling Blockchain IFSC, a joint venture between Hyderabad-based Kling Trading India and Mumbai-based Cosmea Financial Holdings. Torus Kling Blockchain IFSC is a 50:50 joint venture between Kling Trading India and Cosmea Financial Holdings.

ETF or exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other assets. Like a regular stock, in a similar way, it can be traded on a stock exchange. It means that an investor will not directly invest in a virtual coin but in an index. As per the media report, the exchange has already made a request for approval from International Financial Services Centre (IFSCA). Once the ETF secures necessary regulatory approvals, including from GIFT regulatory authority, IFSCA, investors in the country can invest in it using the RBI's liberalized remittances scheme (LRS) route.

Cryptocurrency

PM Narendra Modi stresses on the need of an uniform approach to crypto around the world at WEF

By Amit Srivastava

There is a need for a uniform approach to crypto around the world, says Prime Minister Narendra Modi at the World Economic Forum on January 17. He said that steps taken by a single country will not be sufficient.

As India is drawing laws to regulate the digital currency, PM Modi stressed that other countries too need to work on it. He was addressing the World Economic Forum's Davos Agenda on January 17 via video conference. During five days virtual event, several Heads of State will address including Australian Prime Minister Scott Morrison, Indonesian President Joko Widodo, Israeli Prime Minister Naftali Bennett, Chinese President Xi Jinping, Japanese Prime Minister Kishida Fumio, European Commission President Ursua von der Leyen, Australian Prime Minister Scott Morrison, Indonesian President Joko Widodo, Israeli Prime Minister Naftali Bennett, Chinese President Xi Jinping, among others.

 While the central bank of India wants a complete ban on digital currency, the government brought a bill in the winter session of parliament and currently waiting for approval. During the annual budget for 2022-23, the finance minister Nirmala Sitharaman is likely to announce a major decision regarding cryptocurrency in the country.

Earlier, PM Modi said that cryptocurrency is an emerging technology and should be used to empower democracy, not undermine it. The government believes that unregulated transactions in digital currencies can affect macroeconomic and financial stability.

Dogecoin: Cryptocurrency

Use digital token Dogecoin to buy Tesla’s product

By Amit Srivastava

The announcement by millionaire Elon Musk that Tesla, the largest electric car maker in the world will allow people to buy its brand merchandise using Dogecoin is moving one step closer to the acceptance of the digital currency. Not an electric car, but a few products like children's all-terrain motorbikes can be bought using Dogecoin.

Dogecoin is an open-source peer-to-peer digital currency, favored by Shiba Inus worldwide was initially started as a joke. It is also known as the first meme coin.

The trade of Dogecoin witnessed a sharp jump in its price and recovered a 25% rise within 24 hours. Later, it fell back. The announcement has led the discussion worldwide to using the digital token as a payment option.

Industry experts say that popular among people growing to use cryptos for payments. In fact, VISA has recently conducted a survey that revealed small business owners across nine geographies are willing to accept digital currencies as payment methods.

Dogecoin is based on the popular 'Doge' Internet meme and features a Shiba Inu, a Japanese breed dog, on its logo. Dogecoin differs from Bitcoin's proof-of-work protocol in several ways, one of which is by using Scrypt technology.

Crypto Currency

Terra coin sees 9481% rise in a year, Rs 1.1 lakh turns Rs 1 crore

Amit Srivastava

In the last week, the price of popular digital currency Bitcoin (BTC) saw a rise of 1.05% and its current price is Rs 34,83,503 per coin. However, in a month, its price dropped by 11.24%. Among popular coins based on their market capitalization, Ethereum (ETH) saw a drop of 2.01 % during the week, and its price as of January 13 stands at Rs 2,68,697.89. Even during the month, it dropped by around 17.09% during the month. But in a year, it saw a jump of 208%. 

In the last week, Terra (LUNA) saw a jump of 6.02% and around 9481% during the year. It means rs 1.1 lakh invested in Terra turned into Rs 1 crore during the year. Even Polygon (MATIC) saw a jump in its price by 11.7% and around 7092% in a year.

 

Check here the price movement of popular coins based on market capitalization: 

Coins	Weekly % Change	Monthly % Change	Yearly % Change
Bitcoin (BTC)	▲ 1.05%	▼ 11.24%	▲ 20.34%
Ethereum (ETH)	▼ 2.01%	▼ 17.09%	▲ 208.07%
Dogecoin (DOGE)	▲ 7.6%	▼ 11.26%	▲ 1585%
Terra (LUNA)	▲ 6.02%	▲ 29.08%	▲ 9481%
Polygon (MATIC)	▲ 11.7%	▲ 8.08%	▲ 7092%