New Delhi: The crypto investment frenzy seems to be a bit on the decline in India after the imposition of several taxes and cess by the government on the returns generated from the crypto investment. The Union Budget of 2022 brought in the tax regime for crypto investment. The taxes and cess are still levied on the crypto earnings. Let’s deep dive into the rules and regulations regarding earnings from crypto in India.
A direct tax of 30 percent is levied on the income from crypto under Section 115 BBH of the Income Tax Act of 1961. There exists no exemption in this and no allowance for loss management. It does not matter if you invest for a day or a year; the tax rate is the same. Apart from this, in Sector 194S, 1 percent of TDS is also applicable on every transaction above Rs 10,000. Along with this, an additional 4 percent cess is also levied on the total tax liability.
Schedule VDA Returns
From the financial year 2025-26 (FY26) onwards, it has become mandatory to show crypto income in a new section called “Schedule VDA” in the income tax return. Here you will have to give the date of every transaction that includes the price of purchase and sale and the statement of profit. On the other hand, if the crypto income is hidden by the investor and it comes to light in a tax raid or investigation, then a 60 percent tax, cess, and surcharge will be levied on it. The new rule has been added under section 158B. There is also a provision of imprisonment up to 7 years in cases of tax evasion.
Shifting towards foreign exchanges.
As per the Cointelegraph report, after the implementation of 1 percent TDS, millions of domestic crypto users have left domestic exchanges and switched towards foreign platforms for investment. Therefore, it has caused tax losses to the government, and the local crypto market has weakened. Why are Indian investors doing this. Actually, there is no tax on crypto income in countries like Singapore and Dubai, whereas in India it is taxed as income. There is no exemption on long-term investment, nor is there a facility to compensate for losses. But these rules are not seen in international exchanges. Thereby, the attitude of domestic investors is changing, and they are shifting towards foreign platforms.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds and crypto assets.)