The crypto market traded sharply on Tuesday as heavyweight Bitcoin outperformed and crossed the $32,000 mark. The world’s largest cryptocurrency is rallying after nine consecutive weekly losses and even posted its biggest gains since March. The bulls ignited buying in other counterparts as well. With bitcoin swinging upwards, investors are probably looking to book profits, and therefore understanding taxes on the cryptocurrency is essential in order to make significant gains.
According to CoinMarketCap, Bitcoin Currently trading at $32,104.35 with an increase of 4.84%. The coin has reached an intraday high of $32,145.18.
At the current market cap, bitcoin has a market cap of $611.74 billion. However, its fully diluted market cap was over $674 billion.
According to data from Coin Desk, the transaction value of bitcoin in the last 24 hours was over $71.4 billion, while its transaction count stood at 267,947. Here, bitcoin touched the day’s high of $32,201.04 before correcting.
Bitcoin’s weekly gain was over 8%.
Counterpart Ether – the second largest cryptocurrency – rose almost 4% and traded at around $1,985. While Tether is the third most valuable coin, trading flat near $0.9993.
In percentage terms, Waves gained around 45%, followed by Axi Infinity gained around 22%, Cardano jumped nearly 19%, Kava jumped over 14% and Protocol Close increased by more than 10%.
Overall, the global crypto market cap is currently trading at $1.32 trillion, up 3.91% from the previous day. Its total crypto market volume increased by 34.13% on the previous day to $94.66 billion. The total volume of DeFi currently stands at $8.38B, which is 8.85% of the total crypto market 24-hour volume. The volume of all stable coins is now $81.24B, which is 85.82% of the total 24-hour volume of the crypto market.
In India, there is a 30% tax rate on crypto income. During Budget 2022, Finance Minister Nirmala Sitharaman launched income tax rules to tax income from virtual digital assets, including cryptocurrencies, NFTs, metaverse and other digital currencies. Also, there is no deduction available on expenses incurred to earn from bitcoin. Furthermore, losses from one crypto asset cannot be separated from income from other crypto assets.
To calculate bitcoin earnings, the transfer price of bitcoins is subtracted from the cost of acquisition.
Here is an example of how the bitcoin tax calculation works as per the ClearTax report.
Let’s say you bought two bitcoins 2 lakhs each 1 Lac. If you decide to sell a bitcoin 30,000, ie on loss of 70,000, that is, when the price of bitcoin goes down. In the same year, the price of another bitcoin goes up, and you sell it. 150,000, then the income or profit will be 50,000 then for computing the income tax liability, the loss of Rs. 70,000 were spent from the sale of the former bitcoin. and for profit earned 50,000 on selling bitcoin to the latter, it will show tax liability 15,000 (30% tax rate).