Crypto Corner: Taxing times for your gains now?

The big question for 15 million Indians holding over Rs 15,000 cr worth crypto assets, is how should these gains be reported and how to ensure that they don't fall in a tax loop with the government. Regulators are sparring over jurisdiction while awaiting clarity from the government.

Cryptic Crypto taxation

As per experts the income from cryptocurrencies should be taxed as per the normal income tax slab of an individual, along with a 4 percent cess.

Although, long-term capital gain on cryptos like any other investment attracts a capital gains tax of 20 percent. A holding period of more than 36 months is considered long-term in this case.

Crypto - earnings a livelihood through tokens

If an individual is trading frequently in such assets or his livelihood is dependent on the income from trading in cryptocurrencies, then such earnings are classified as business income.

If the government classifies cryptocurrencies as an asset or commodity, the existing norms are likely to continue. That can change if there is a separate code or guideline for the taxation of digital tokens.

Must remember...

Experts however warn that it is imperative that individuals make proper reporting/disclosures in the tax returns they file and pay appropriate taxes on these transactions when such income is earned even though no clear guidelines have been given by the govt.