Explainer: Have you invested money in Cryptocurrency? Make tax saving arrangements like this before 31st March - Newztezz Online

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Tuesday, March 19, 2024

Explainer: Have you invested money in Cryptocurrency? Make tax saving arrangements like this before 31st March

Have you also invested money in cryptocurrency? Then you would expect to get excellent returns from the recent boom, but do you know that cryptocurrency is also taxed? So what is the way to save it? Let us tell...

The 'good days' of those investing in cryptocurrency have returned. If we look at the data of the last year, many cryptocurrencies have given better returns, in fact, for many people, they have also emerged as 'multibagger return' assets. But do you know that investment in cryptocurrency in India comes under the ambit of income tax, so is there any way to save this tax? Let us explain to you…

Investment in cryptocurrency in India comes under the category of capital gains taxation. The Indian government does not recognize it as a currency, this means that you cannot buy and sell any goods or services with cryptocurrency, you cannot make any kind of payment with it in India. Although the Government of India has recognized it as a digital asset class, you can invest or trade in cryptocurrencies just like you invest in a share in demat form or buy an NFT. In such a situation, some easy tips to save tax on this are being told to you here…

Tips to save tax on cryptocurrency

If you want to save your tax on cryptocurrency investment, then you have to keep these few things in mind…

First of all, you have to keep accurate records of all your cryptocurrency investment transactions. Meaning, when and on what date, how much cryptocurrency did you buy and when did you sell it. This will make it easier for you to do cryptocurrency related transactions and calculate tax on it in a certain time frame.

Capital gains tax is applicable on cryptocurrency, but if you hold it for more than a year, then it comes under the purview of long term capital gains tax instead of short term, which makes you cheaper than short term gains. Is.

One way to save tax on cryptocurrency is to donate it. In this way, you will get the tax exemption available on donations.

For tax calculations on cryptocurrencies, you should use 'crypto-specific' tax software. You will find many tools for this online. This makes it easier for you to calculate tax.

Many times some investors do not show all their cryptocurrency transactions in their ITR. But doing this should be avoided. No matter how small the amount of cryptocurrency transaction you have done, it should be shown in your ITR, otherwise you may have to face heavy penalty.

How is tax on cryptocurrency calculated?

In India, cryptocurrency has been considered a digital asset class under Section 115BBH of the Income Tax Act. On trading in cryptocurrency you have to pay tax at the rate of 30 percent. There is also a cess of 4 percent.

Not only this, if you buy cryptocurrency worth more than Rs 50,000 at a time, you also have to pay 1 percent TDS. There is tax liability on trading, selling, profit booking and swapping of cryptocurrencies in India.

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