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Friday, March 24, 2023
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Cryptocurrency Assets Sold at A Profit Will be Subject to A 30% Tax from April 1

Beginning April 1, cryptocurrency gains will be taxed at 30%. It’s the highest tax bracket, with a rate that’s the same as lottery winnings.

From Bitcoin to non-fungible tokens, this would apply to all virtual digital assets (VDA) and their earnings (NFTs). For example, if an investor buys a cryptocurrency for $10,000 and sells it for $15,000, generating a profit of $5,000, they must pay a tax of $1,500, which is 30% of the profit.

A 30% tax on bitcoin assets was proposed in the Union Budget 2022-23. On virtual currency contributions surpassing $10,000 per year, a 1% tax deducted at source (TDS) was also suggested. Cryptocurrency investors, on the other hand, will need to be aware of a few rules to stay on the right side of the law in the fiscal year 2022-23.

After accounting for all bitcoin transactions for the year, if an investor is in a loss overall with no earnings, there will be no tax to pay.

Similarly, investors who have purchased a crypto asset that has significantly increased in value but have yet to sell it will not be taxed. Their gains will not be taxed until they sell it and make a profit.

While computing tax, losses suffered from one type of VDA cannot be offset against gains from any transaction involving another VDA. This means that investors will have to pay a 30% tax on any gains they make, and losses will not be deducted from the final taxation amount if they trade various tokens. As a result, if you make a profit on one token but lose on the other, you must still pay a 30% tax on the profitable token.

The 1% TDS is set to go into effect on July 1, 2022. Regardless of whether an investor makes a profit or losses, the TDS will be taken from the total transaction value.

Professionals and company owners will be unable to deduct gains or losses from their primary income from their bitcoin income.

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