Have you invested in cryptocurrencies earlier this year? Are you shocked after getting to know about the tax on cryptocurrency in India? If so, remember that the crypto tax proposal is still in draft. But, the law may come into effect anytime. So, it is extremely important to know everything about the crypto taxes in India. It helps you avoid troubles you tend to face in your future crypto transactions. 

After hearing about crypto tax, your mind might think about many things like:

• do you have to pay taxes on crypto compulsory? 
• When do you require crypto taxes?
• How can you calculate cryptocurrency tax?

Here, you will get the possible solution for your queries. Based on that, you can decide whether to invest in the cryptos further. As the Indian Government has started to take some actions regarding digital assets, you need to watch closely for more updates in the future. It can be either positive or negative but ensure you are ready to accept anything to make huge profits from cryptos. 

Is it necessary to pay taxes on crypto?

Yes! Every crypto investor should pay taxes on cryptocurrency. As per the recent financial bill, the Government is charging a flat rate of 30% from your crypto transaction. Cryptos are taxed in a similar way that other asset classes and property types are. 

From the Government’s perspective, trading cryptos is much like selling collectible coins that have higher appreciation value. So, whenever you make a profit or loss on the crypto, you have to report it to the IRS. 

Remember that the IRS expects you to report all the taxable income from crypto, whether you obtain a tax form from the crypto exchange or not. If you paid to report the income from crypto, then the IRS could end up handing you heavy penalties. 

What are the taxable crypto transactions?

The IRS can levy the taxes on crypto in a couple of ways. Generally, how you pay taxes on the cryptocurrencies depends on the type of crypto transaction you process. Here are the major instances in which you are expected to report the crypto transaction to the IRS and pay the tax.

• The IRS considers crypto your property instead of the hard currency you own. So, you need to pay the tax whenever you sell crypto for cash. It is similar to the tax you pay for other capital gains. 
• The transaction will be taxable whenever you use crypto, like normal cash. For example, if you pay for goods or services using crypto, it is considered a taxable event.
• You have to pay taxes on the cryptocurrency transactions in which you access crypto to purchase more crypto. 
• Finally, when you get paid crypto by the employer, it comes under the taxable event. Like converting or using crypto to pay for products, you have to report the crypto compensation with the help of a normal IRS tax return.

Conclusion

You will now get some idea about crypto taxation in India. So, whether you think about buying the crypto or already holding the digital asset, pay enough attention to the crypto taxes to avoid heavy penalties.