Should income from cryptocurrency be taxed as capital gains?

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Hello there takoana is here and today we are going to discuss an important aspect regarding taxation on crypto. The Jodhpur(India)-based Income Tax Appellate Tribunal whose short form is ITAT, clarified in its Tuesday decision on how income tax should be calculated and applied to profits from crypto. According to the ITAT's decision, crypto like Ethereum and Bitcoin are capital assets and there are more coins too, which means that profits from these coin's sales will be considered capital gains rather than income from other earning sources.

You should know that before the Virtual Digital Assets rule came into effect in the 2022 year, profits from the sale of crypto were classified as capital gains, with taxes calculated on cryptocurrencies in the same way as profits from real estate and stock. Crypto Investors holding cryptocurrencies for more than 3 years can classify their profits as long-term capital gains, and this way they are reducing their tax burden.

One thing is clear here that cryptocurrency investors must maintain detailed records of all the transactions and by all the transactions i mean to say even single small transaction should be there, including sale and purchase dates and calculation of profits on crypto, to meet tax compliance requirements. The latest ITAT decision simplifies crypto taxation and it also ensures that crypto investors assess their profits correctly based on the timing of the transaction.

From April 1, 2022, the Indian government has imposed a flat 30% taxation on all crypto profits regardless of the holding period. Unlike earlier rules, no exemptions or deductions are allowed under this regime and this is where the problem is. Whether you hold your cryptocurrency for a year or months, the same tax rate is now applicable on them.

This is painful but we have to bear it and we are already bearing it. Glad to see your opinion below please share this post.

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