Crypto tax takes effect from April 1: All you need to know

cnbctv18.com:

Beginning April 1, all forms of virtual digital assets (VDA) or crypto assets that are sold at a profit will attract a tax of 30 percent. The announcement was made by Finance Minister Nirmala Sitharaman in her Union Budget speech this year.While this high crypto tax rate has made stock trading (which attracts a maximum tax rate of 15 percent) a more lucrative option, it has also left investors with several questions.Here are the most frequently asked questions (FAQs) on the proposed crypto tax.How will cryptocurrency assets be taxed?There is a direct tax provision on the income (or profit) made from cryptocurrencies.

As mentioned earlier, all crypto profits gained over the year will be taxed at 30 percent -- the highest tax bracket. So, if you buy a crypto asset for Rs 200 and sell it for Rs 400, you will have to pay a 30 percent tax on the Rs 200 profit you made i.e.

Rs 60.Will crypto investments also be taxed?No. The government has only levied a tax on the income or profit made from cryptocurrencies.

Going back to the earlier example, if you buy a crypto asset for Rs 200 and sell it for Rs 400, you will only pay the 30 percent tax on the profit (Rs 200) that you made and not the entire investment.Will crypto transactions be taxed?Yes. All crypto transactions will be subject to a 1 percent tax deducted at source (TDS).

However, the cumulative TDS can be set off against the total income tax owed at the end of the year.Will the government cut TDS even if one is selling crypto at a loss?Yes, the TDS is deducted upon the entire crypto transaction value even if one makes a loss. So, if you sell a crypto asset for Rs 500 at a loss of Rs 10, you will still have to pay the 1 percent TDS on the entire transaction -- Rs 5.Can I