The demand for cryptocurrencies is on a roller coaster ride this year due to the bearish bandwagon in the global market. By end of the second quarter of 2022, emerging markets currently dominate cryptocurrency adoption, and India ranks fourth. Cryptocurrencies continue to be among hot topics for investment options despite their complexity, and high sentiment-driven nature. Cryptocurrencies are risker than stocks. However, this market has shown a unique form of investment in digital currencies and many are still hoodwinked by its charm. Just like every other investment in market-related instruments, cryptocurrencies also have a host of tax rates that an investor will have to pay on their buy and sell. However, some tax reliefs are applicable especially for crypto assets like airdrops, savings accounts, etc.
With effect from April 1, the Indian government has levied a 30% tax rate on virtual currency assets followed by a 1% TDS that came into force from July 1 this year. TDS will not be deducted on consideration of ₹10,000 and ₹50,000 depending upon the specified investors under the tax brackets.
Vaibhav Gupta, Co-founder, TaxCryp Technologies said, "Tax planning for transactions involving the transfer of cryptocurrencies is a bleak possibility since the government has come up with a rather water-tight taxation regime of 30% tax on all gains with no set-off for loss transactions."
Gupta added, "However, the unilateral receipts from crypto assets such as airdrops, interest from deposits, etc. should be taxed at the applicable slab rate of a taxpayer rather than the maximum rate of 30%, thus providing some tax relief to crypto investors."
As per Chainalysis Global Crypto Adoption Index report for the second quarter of 2022,
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