With a profit of Rs 50,000, Rs 17,500 tax is paid.
If you have made a profit of Rs 1,000 from selling cryptocurrencies and after accounting for 30% tax deduction, you will not get Rs 700.
Cryptocurrency is a digital currency that is an alternative form of payment created using encryption algorithms. In the Union Budget 2022, the government officially classified digital assets, including crypto assets, as Virtual Digital Assets. The result of this decision was that income from the transfer of virtual digital assets such as cryptocurrencies and NFTs (non-fungible tokens) will be taxed at a flat rate of 30 percent.
However, the tax rate is not limited to just 30 percent and includes other charges as well. For example, if you made a profit of Rs 1,000 from selling an amount of cryptocurrency and then post the 30 percent tax deduction, you will not get Rs 700. He will be subject to a 4 per cent franchise charge and 1 per cent tax deducted at source (TDS), making the total tax rate 35 per cent.
Suppose you have sold shares worth Rs 100,000 on a crypto exchange. A cryptocurrency exchange helps investors buy and sell digital currencies such as Bitcoin, Ethereum or Tether. He made a profit of Rs 50,000 on the sale of these shares. Now, instead of Rs 50,000, only Rs 32,500 will be credited to your account. That means 1 per cent TDS, a flat rate of 30 per cent tax and a 4 per cent tax charge on earnings of Rs 50,000 have been levied. Now your total income tax rate becomes 35 percent, which means you have to pay tax of Rs 17,500 on a profit of Rs 50,000.
Esya Centre, a New Delhi-based technology policy think tank, has come up with a proposal on the 1 percent deducted at source (TDS) crypto tax policy. The technology policy think tank proposed that the TDS tax on cryptocurrencies should be reduced to 0.01 percent. The findings were published in a study titled Impact Assessment of Taxes Deducted at Source on the Indian Virtual Digital Asset Market.
