a woman and man discuss about crypto tax

 

The cryptocurrency space in India has taken the world by storm, which means it’s time to start saving your tax on it! 

You might already know that you have to pay taxes on cryptocurrency, but this article will explain how to do so without sacrificing any of the fun stuff. 

Here are 3 tips on how to save tax on cryptocurrency in India – enjoy!

1) Understand if you need to pay tax

If you are earning money from crypto activities, then you need to pay income tax. If you are earning more than Rs 10 lakhs (INR) from crypto activities per annum, then you need to file your return. 

You will also be liable for wealth tax if your total worth of cryptocurrencies is more than Rs 50 lakhs (INR). 

If you are a regular trader and trade every day, then it's best that you declare your profits before the end of the month because at the end of the month, banks charge a lot of money as TDS (tax deducted at source). 

It's always better to go with a conservative estimate.

2) Report your crypto earnings

If you're a trader, you will be taxed at the time of sale and purchase. If you're an investor, your gains are treated as capital gains and are subject to either long term or short term tax rates. 

Short term rates apply for profits less than one year; long term applies for profits greater than one year. For short term capital gains, the rate is 10% if your income exceeds Rs.10 lakhs (approx $14,800). 

For long-term capital gains, the rate is 20%. You can also choose to pay taxes annually by filing a TDS form with your tax return.

3) Check if you can make capital gains from cryptocurrencies

If you've made a profit trading cryptocurrencies, then you may be liable for capital gains tax. You will have to declare your profits as income and pay the appropriate amount of tax. 

However, there are ways that you can reduce this cost by making use of certain exemptions and deductions: 

1) Capital losses - If you have made any losses trading cryptocurrencies, these can be offset against your income or other capital gains, which could help lower the amount of tax payable. 

2) Home office expenses - Expenditure incurred while running a business from home is often deductible. This could include things like internet bills, electricity costs and even some cryptocurrency mining equipment.

Conclusion

1. Make sure you are paying taxes on your crypto gains by either claiming it as income, or making a capital gain. 

2. Keep detailed records of all your transactions and trades. You can even use software like Bitcoin Ledger to keep track of everything for you! 

3. If you have an Indian bank account, think about opening a cryptocurrency wallet as an alternative way of storing your coins and tokens. 

This will help reduce the need for cash transactions and make it easier for you to manage your money. 

It also means you won't have to pay any tax when you exchange rupees into cryptocurrencies, because there's no tax on cryptocurrency conversions within the country.