Crypto Taxation and How Mudrex can Aid with this?

Most of you would have been confused hopping around the websites to know about the crypto taxation in India, right? Let us give you a brief around it in simpler words making your task easier. 

In Budget 2022, the government of India has clarified the taxation aspects around ‘Virtual Digital Assets’ (VDA), which also includes cryptocurrencies. During the budget session, Finance Minister Nirmala Sitharaman has cleared the air saying that:

  • Income from the transfer of Virtual Digital Assets, such as cryptos and NFTs, will be taxed at 30%.
  • Except for the acquisition cost, no deduction will be allowed while reporting income from the transfer of digital assets.
  • 1% TDS will be imposed on all VDA transactions.
  • The losses from these digital assets cannot be set off against any other income.
  • And finally, gifting of these digital assets will be taxed on the side of the receiver. Losses incurred from one currency cannot be set off against the other. 

But the latest clarifications of the government proposed Section 115BBG in Budget 2022, which states that. 

  • Losses from one virtual digital currency cannot be set off against the income of the other. The infrastructural cost incurred on mining crypto assets will not be treated as an acquisition cost. 

Now you might be wondering, what does a Digital Asset mean according to the proposed rules? 

Cryptocurrencies, DeFi (decentralized finance) and non-fungible tokens (NFTs) come under digital assets. Gold, central bank digital currency (CBDC), or other traditional digital assets are excluded. 

How will 30% tax be charged?

For instance, if you have bought Bitcoin and Ethereum for INR 25,000 and 20,000, respectively. Later, you sold BTC for 30,000 while ETH sold for 15,000. Even though you are running into loss as ETH was sold at a lower rate, you will still need to pay 30% tax on the gained profit from BTC, which is INR 5,000. 

Why did the government come up with taxation? 

The primary intent behind the taxation is to understand the scale of the crypto industry, acknowledging crypto as an asset to build steps towards formal legalization and regulations. The other reason is to curb illicit activities such as gambling. 

When are the taxation rules coming into play? 

The 30% taxation is already in place from 1st April 2022. At the same time, the 1% TDS will soon come into effect from 1st July 2022. A detailed clarity over the TDS is yet to be presented by the government. 

If you are worried about how to sustain these taxation regulations, no worries! Mudrex can be your tax-efficient vehicle. 

Yes, you heard it right. Mudrex can help in keeping your love for crypto alive. When you invest in Coin Sets, the gains get net internally before settling you. 

Mudrex can soon give you a complete statement of account and details of all transactions to declare taxes efficiently. With the help of Mudrex, you can file your taxes directly. 

Now you know how to get your taxes settled with Mudrex, right? 

Happy Investing!


Frequently asked questions:


Q: Can losses on crypto be netted against gains in crypto? 


A: No, you need to pay tax on the gains. It can’t offset losses. 


Q: Can losses on crypto be netted against gains in stock?


A: No. 


Q: Can losses on crypto be carried forward? 


A: No. 


Q: Any deductions allowed in gains? 


A: Yes. You can deduct the cost of acquisition. 


Q: What is this 1% TDS? 


A: Any trade you do, crypto to crypto or INR to crypto, you will need to pay 1% TDS. 


Q: Do you need to pay tax for AirDrop? 


A: Yes, you need to pay 30% tax when you convert it into INR. Taxation is also extended to all crypto gifts. 



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