Crypto 🇮🇳
Demystifying Crypto Taxes and Legalities: Partner with Plan B Consultancy
Cryptocurrency in a Nutshell
What it is: Cryptocurrency (crypto) is a digital asset designed to work as a medium of exchange that uses cryptography for security. It operates independently of a central bank or government.
Applications: While primarily used for peer-to-peer payments (like Bitcoin), crypto has diverse applications:
- Decentralized Finance (DeFi): Enables financial services (borrowing, lending) without intermediaries.
- Non-Fungible Tokens (NFTs): Represent unique digital ownership of assets (art, collectibles).
- Smart Contracts: Self-executing contracts that automate agreements upon pre-defined conditions.
Important Considerations:
- Volatility: Crypto prices can fluctuate dramatically, making them risky investments.
- Regulation: The regulatory landscape for crypto is still evolving globally.
- Security: Crypto wallets can be hacked, so secure storage and strong passwords are crucial.
Status in India:
- No legal tender status (cannot be used as official currency for everyday transactions).
- Trading and possession allowed, but regulations are evolving.
- Government considering a central bank digital currency (CBDC).
Taxation in India:
- Profits from crypto transactions are taxed at 30% + cess + surcharge.
- No deductions for losses from crypto against other income sources.
- 1% TDS (Tax Deducted at Source) applies on crypto sale transactions.
- Different tax rules may apply for mining, airdrops etc. (Consult a tax professional)
| Income Source | Tax Rate | Deductions Allowed | TDS Applicable |
| Sale of Crypto Assets | 30% + cess + surcharge | No | Yes (1%) |
| Crypto Mining Income | 30% + cess + surcharge | No | Not Applicable |
| Airdrops | 30% + cess + surcharge | No | Not Applicable |
| Receiving Crypto as Payment | 30% + cess + surcharge | No | Not Applicable (if received for services)** |
| Receiving Crypto as Gift** | 30% + cess + surcharge | No | Not Applicable (if below ₹50,000) |
Navigating the ever-changing world of cryptocurrency taxation in India can be complex. Here’s where Plan B Consultancy can be your trusted partner. Our team of tax professionals stays up-to-date on the latest crypto tax regulations and understands the nuances of reporting crypto income. We can help you with:
- Accurate Tax Calculations: We can ensure your crypto transactions are categorized correctly and taxes are calculated according to the latest regulations.
- TDS Compliance: We can guide you on complying with the 1% TDS requirement for crypto sales on Indian exchanges.
- Record-Keeping Assistance: Maintaining clear records of your crypto transactions is crucial for tax purposes. We can provide guidance on setting up a streamlined record-keeping system to save you time and ensure accurate reporting.
- Strategic Tax Planning: Looking to optimize your crypto tax strategy? We can help you develop a plan that minimizes your tax burden while staying compliant.
Plan B goes beyond just tax calculations. We offer comprehensive support to help you navigate the complexities of cryptocurrency taxation in India with confidence.
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