Cryptocurrencies are currently taxed in India. The new tax law on cryptocurrencies and other digital assets will come into effect on April 1, 2022.
Presenting the 2022-23 Union Budget for the Lok Sabha, Finance Minister Nirmala Sitharaman said the transfer of digital assets would be subject to a 30% tax rate.
In addition, a 1% tax withholding tax (TDS) is levied on all transfers of such assets. In a budget speech on February 1, Mr. Sisaraman said that gifts in the form of cryptocurrencies will also be taxed at the same rate.
Most financial experts believe that it may be beneficial for individual investors to switch their funds from cryptocurrencies to investment trusts or stocks to avoid taxes.
When it comes to taxation, it is beneficial for individual investors to switch their funds from crypto to mutual funds or stocks to avoid taxes, given that crypto tax rates are higher than stocks and mutual funds.
Also, no expense deductions are allowed for cryptocurrencies, the same is true for stocks and mutual funds. However, other factors such as risk appetite, ROI, and portfolio allocation must be taken into account when making an overall decision, “said co-founder and CEO Abhishek Soni.
It would be wise to transfer some of the funds to the cryptocurrency market.
A distribution of 5-10% is recommended, depending on people’s risk preferences. It is a pity to miss it because it is a new technology. Many still regret missing out on the rise of Bitcoin and Ethereum. In addition, the volatility of cryptocurrencies is so high that more exposure is a concern. Therefore, 5-10% exposure to the portfolio is the best option.
Diversification is the key to creating a steady stream of passive income,” said Vinshu Gupta, Founder and Director of Nonceblox Blockchain Studio.
What are the current taxes paid on income from stocks and investment trusts? What about the new 30% tax announced on crypto income?
Short-term capital gains from the sale of stock/equity-oriented mutual funds are subject to a flat rate of 15%. However, long-term capital gains from the sale of stock/equity-oriented mutual funds are subject to taxes of £10 and over £1 million.
There is no profit tax up to 1lakh. Other long-term capital gains are taxed at a 20% tax rate with the benefits of indexing, and short-term capital gains are taxed at the applicable flat rate, Abhishek Soni said.
In addition, Budget 2022 will introduce crypto taxation. It proposes to tax crypto income at a flat rate of 30% with no deductible costs other than acquisition costs.
Additionally, crypto losses cannot be offset against any other earnings nor are they carried forward, Soni added.
Kunal Jagdale, founder of BitsAir Exchange, said the proposed 30% tax on crypto-trading income is definitely too high.
While this may not matter much to taxpayers in the income bracket above, where the tax rate is already 30%, it will impact those who have so far benefited from a tax-free return. through cryptocurrency trading.
Typically, this group includes low-income earners and students who pay no or very little tax on their crypto profits. As a result, the tax increase will only affect small players, he added. Vinshu Gupta, Founder and Director of Nonceblox Blockchain Studio, says a 30% crypto tax is both better and worse.
A 30% tax on cryptography is good or bad. No complicated tax formulas are required, which saves you a lot of worries and hassles.
It’s even worse considering the flat rate system. No additional charges, accountant fees, no confusion. Most people rarely hold it because every stock has good and bad news every day, “Vinshu Gupta said.
Tax on Stocks:
Long Term Capital Gains Tax is Tax-free if equity is held for a couple of 12 months and purchased from a stock exchange.
Short Term Capital Gains Tax (Holding Period much less than one 12 months): 15% flat rate.
Tax on Mutual Funds Long Term Capital Gains Tax :
Gains Exceeding 1lakh:
Equity Funds: 10% + Cess
Debt Funds: 20% + Cess Short Term Capital Gains Tax : 15% Flat Rate.
