What cryptocurrency investors should make changes in income tax during ITR filing

speaking on of income tax department make changes when taxing cryptocurrency and other virtual assets; Kunal Jagdale, Founder, BitsAir Exchange said, “Government has provided clarification on taxation policy for individuals. Indian investors cannot offset losses from one crypto exchange against profits from others. This means, even if If you make a loss in one property, you will have to pay tax on the gain on the others.”

Explaining what this income tax rule means for a cryptocurrency investor starting today; Manoj Dalmiya, Founder, ProSetz Exchange, said, “As the new financial year starts from 1st April 2022, a new bill on virtual crypto assets comes into law. As per the bill a specific taxation regime for Virtual Digital Asset (VDA) will be followed. This includes flat 30 per cent tax on profits without any slab deduction. Loss in one VDA will not be segregated from profit in another VDA. Hence all loss transactions will be ignored for tax calculation and only Profits will be calculated. All trading pairs whether it is fiat to crypto or crypto to crypto will be a taxable event. Gift of VDA in addition to holding and trading will also be taxable in the hands of recipients.”

This tax bill also covers miners because any expense of setting up mining is not allowed as a deduction. Therefore the cost of purchasing a mining transaction will be zero. Only the cost of acquisition/purchase can be adjusted on VDA.

Therefore, a cryptocurrency investor must understand that only profits will be taxed at 30% without any set-off on losses and other costs if mining is involved. Only the cost of acquisition/purchase will be considered on VDA.