crypto tax file india

Pay Crypto Tax Online: How to File a Crypto Tax Return in India?

Crypto investors will have to pay a 30% tax on their profits

As FY22-23 starts new Crypto Tax law comes into effect in India. Anyone who is making a profit in crypto now has to pay lots of Taxes to the Government. Earlier to FY22-23 for the crypto transaction, it was not necessary to pay taxes until you hit the minimum income tax thresholds. Now everything is different apart from normal taxes you also have to pay TDS on the transactions. So let’s discuss what is the current scenario of Crypto tax in India as an Indian resident and crypto holder and trader.

How much Crypto Tax do you have to pay in India?

The short answer is 30%. But the long answer is a little bit complicated. Let’s understand the current crypto taxing situation with examples. Suppose you have bought Bitcoin for 1000 Indian Rupee and sold the same amount of Bitcoin for 2000 Rupee now in this case you have to pay ((2000 (Initial Investment+Profit)-1000 (Initial Investment)=1000/100×30))=300 Rupee. Now, this example is the most simple case.

Now suppose you have bought two crypto coins; Bitcoin worth 1000 Indian Rupee and Solana worth 1000 Indian Rupee. And sold Bitcoin for 1500 Indian Rupee and 750 Indian Rupee for Solana. In this case, you have made a 500 Rupee profit in Bitcoin and a 250 Rupee loss in Solana so now you will have to pay (1500-1000=500/100×30)=150 Rupee tax. You don’t need to pay tax on the loss. But you also can’t set off your loss against your other transaction. That means you can’t take your 500 Rupee profit from Bitcoin and 250 Rupee loss from Solana and calculate your net profit as 250 Rupee and pay taxes on this amount, this is now allowed. You will have to calculate like this if you have bought multiple coins. Just remember you can’t set off the loss of one coin against another coin’s profit that is not allowed. We know this is harsh but for now, that is the rule.

So as a crypto holder and trader in India you have to keep a record of each crypto transaction from 1 April 2022 onwards. Otherwise, it will become a very complicated calculation in time of Tax payment. Also, we suggest keeping your trade number low so that you don’t lose more money on TDS. Yes, You have to pay TDS also in each transaction from 1 July 2022 onwards.

How much TDS on Crypto Transactions?

Apart from a 30% tax on profits, you have to pay 1% TDS on each transaction in crypto from 1 July 2022. That means if you do a 1000 Rupee transaction you will have to pay 10 Rupees as TDS. This will be a very big issue for traders who make multiple trades in a day. Otherwise, if you just buy and hold crypto for the long term this will not impact you much. Also, one thing which is still not clear about TDS is who is going to pay the TDS; both parties (buyer & seller) will not pay TDS but the irony is that it’s still not clear who will be the TDS payer for a transaction, the buyer or the seller.

Also, it is still not clear who will collect TDS from the transactions, most probably exchanges (We are talking about Indian exchanges here) will do this part for you. For International exchanges such as Binance, we are not sure about the TDS collection process because nothing is declared yet officially from the Indian Government and Binance.

How to file a Crypto Tax return online?

As of now, there is no clarity on how to file a crypto tax return in India. However, reportedly, from next year ITR form will likely add a separate column for crypto. In that column, you have to fill in all crypto transaction details.

  • You have to visit the Income Tax Department’s official portal and log in via PAN.
  • Now Navigate to the e-file section and fill out the ITR form adding your all income sources (including crypto).
  • Finally, calculate the payable tax.
  • Now complete the verification process by Aadhaar OTP or other available methods.
  • By visiting the “e-Pay taxes” option, you can pay your income tax/crypto tax online.

Note: Keep in mind that this is just our speculations, so take it with a pinch of salt. We will update this section after the government publishes the official guidelines.

Final Thoughts:

This is all the information we have in our hands yet. As Indian traders and holders 30% tax on profits from 1 April 2022 plus 1% TDS from 1 July 2022; is the main thing to remember. Also if you are a trader keep your trade number low so that you have to pay less TDS & for holders to buy good projects and hold for the long term. Looking at the current rules we can say that the Indian government is either want to make Crypto investment looks unattractive or they want to curb out speculative aspect of Crypto investment.

Disclaimer: We are not Tax Experts or CA by profession so do consult with your CA before taking tax decisions.

About Bhabesh Talukdar

He is the Founder & Technical Head of DealNTech. He loves technology and is always hooked on new gadgets. From the latest mobile processor development to newest display technology on the market; he research about all. He has 6 years of experience in the field of IT, communication technology and blogging. Email: bhabesh@dealntech.com

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