How do Taxes on Cryptocurrency work in India?

India has been a big player for retail traders, hunters, whales, and many other types of investors in the cryptocurrency market. Over the years the investment patterns of Indian citizens have gone from investing in standard investment tools like mutual funds, stock markets, and government schemes to modern investment tools like cryptocurrencies.

The beginning of this trend can be dated back to 2013-2017 in India. The popularity and buzz around cryptocurrency began in India, and around the globe in general, primarily because of the unregulated nature of the crypto market. No governments had any control over the crypto market, this was a form of currency system built on the backbones of mutual trust among people from around the world, and no government’s action could manipulate these currencies, unlike the traditional currencies which easily get affected by even smallest of actions and reactions from governments around the globe due to the highly shackled nature of the global markets today. 

The story behind taxes on cryptocurrencies

There were no taxes that could be charged on the capital gains from these investment tools. This is because of the fact that most governments from around the world never wanted to recognize blockchain and cryptocurrencies. They feared losing their grip on the most important asset that forms the spine of their governance i.e. Money. Everything was working fine, and in fact, like a daydream coming true for the investors in India until April 2022.

After much debate, discussions, and speculations from the Reserve Bank of India (RBI), comes up with an astonishing, and indeed heart-wrecking plan for the investors in the cryptocurrency market, to regulate the capital gains from the cryptocurrencies.

A special section 115BBH was introduced by the Union Finance Minister Nirmala Sitharaman, introducing crypto tax India, according to which the government entitled itself to get a cut in the capital gains of the citizens from the crypto market for the first time.

How does crypto tax work in India?

According to the newly introduced section of 115BH Virtual Digital Assets Taxation Scheme, in the Income Tax Act 1995, the Indian government imposed a 30% tax along with a 4% surcharge on the gains made in the crypto trading markets. This 30% tax slab is the same as for the citizens falling under the highest income tax bracket of ₹10 lakh plus. Easier said than done, the taxation process on cryptocurrencies is fairly difficult for all kinds of investors. There are lots of calculations and parameters that you need to take care of while filling the tds on crypto.

Binocs is an amazing one-stop solution for you to figure out your taxes on crypto profits step-by-step. It is architected in a way that allows it to calculate, dashboard, and track all your portfolios and holdings from one single platform. It allows its users to completely understand their tax breakdowns in layman’s terms. So even if you are not a big finance geek, you don’t need to worry about filing taxes next time.

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