Sonu Jain 🇮🇳 (Crypto Tax Expert)

Sonu Jain 🇮🇳 (Crypto Tax Expert)

27-03-2022

04:00

Budget 2022: #CryptoTax Everything you need to know about 🇮🇳 Crypto Tax for FY 22-23 🧵 Covers: ⚡️Salary ⚡️Consultancy ⚡️Airdrops ⚡️Mining ⚡️Yield farming, Staking, Lending, Interest ⚡️Trading/Investing ⚡️Borrowing ⚡️NFT ⚡️QnA @simplykashif @CryptooAdy @NischalShetty

Let's first recap the Tax sections: Sec 115BBH: 30% Tax to be paid on ⭐ Profits made ⭐ on "Transfer" ⭐of Crypto/NFT 📒Profit = Sale price - Cost of Purchase 📒Transfer = Sale, Exchange or Surrender of Crypto/NFT (2/17)

Section 194S: ⭐Buyer to deduct 1% TDS ⭐on amount of VDA purchased ⭐from "Resident" seller 📒 Resident = Stay in India for >181 days 📒Trading in Int'l exchange/DEX - No TDS (P2P - TDS applicable) 📒Transfer within own wallets - No TDS 📒TDS from 01/07/2022 (3/17)

Let's now analyse each Transaction: 1. Salary received in Crypto: There are 2 tax events: a. Receipt of Salary: Market value (MV) of Crypto on date of receipt taxable as Salary - SLAB RATES b. Sale of Crypto: Tax at 30% on Profit = Sale price - MV TDS at 1% by buyer (4/17)

2. Consultancy charges received in Crypto: There are 2 tax events: a. Receipt of Crypto: MV of Crypto on date of receipt taxable as Business Income - SLAB RATES. Expense deduction - Allowed b. Sale of Crypto: Tax at 30% on Profit = Sale price - MV TDS at 1% by buyer (5/17)

3. Airdrop: There are 2 tax events: a. Receipt of Airdrop: Market value (MV) on date of receipt taxable as Other Income - SLAB RATES b. Sale of Crypto: Tax at 30% on Profit = Sale price - MV *If no MV on Airdrop date. Then pay Tax on Sale date (6/17)

3. Gifts: There are 2 tax events: a. Receipt of Crypto from: Blood relatives: Exempted Others: Exempt up to Rs.50K in year (If crosses, full taxable at slab rates) b. On Sale: 30% tax on Profit = Sale Price - Cost to previous owner/Amt taxed as Gift Income (7/17)

4. Mining: There are 2 tax events: a. Receipt of reward: MV on date of receipt taxable as Business Income* - SLAB RATES b. Sale of Crypto: 30% Tax on Profit = Sale price - MV TDS @ 1% by buyer *My view: Sec 115BBH - Not applicable. Expense can be claimed as deduction (8/17)

5. Yield Farming/Staking/Lending/Interest Income: There are 2 tax event: a. Reward claimed*: MV taxable as Other Income - SLAB RATES Expense for claiming income - allowed b. Sale of Crypto: 30% Tax on Profit = Sale price - MV *Disclose Income "after claiming" (9/17)

6. Trading/Investing ✅ Tax at flat 30% + Surcharge + 4% Cess ⚠️ Tax "ONLY ON PROFITS" ✅ Deduction allowed only for "Purchase price" ⚠️ No deduction for Brokerage, Interest, Royalty etc. 🚨 Disclose in ITR as Capital Gains. (9/16)

7. Borrowing: Borrowing and repayment of Loan is NOT a Taxable event. However, if Borrowed amount is used to trade and earn profit, Then tax payable on those profits as per Point 6 above. ⭐ If used smartly, You can HODL + cover small expenses using this technique :D (10/16)

8. NFTs: ✅ Tax at flat 30% + Surcharge + 4% Cess ✅ Deduction allowed only for "Purchase price" ⚠️ Tax "ONLY ON PROFITS" ⚠️ No deduction for Brokerage, Royalty etc 🔴 NFT Creators & flippers: making a separate thread. Stay tuned :D 🚨 Disclose in ITR as Capital Gain (11/16)

9. QnA: Answering some popular Questions. a. Earned a profit of $1000 by trading, but wallet got hacked Should I pay tax? - Unfortunately Yes, You will have to pay tax on profits at 30% b. If I use DEX, Govt. won't find out? - They can and will find out easily (12/16)

c. Should I pay GST on NFT flipped/ Created? - Ideally yes, A detailed thread coming up on that shortly. d. I Transferred my crypto from Exchange to Metamask. Should i pay tax/TDS? - No TDS/Tax applicable on transfer within own Wallets. (13/16)

e. If I made a Loss in Bitcoin of Rs.500 and made a gain of Rs.1000 in Bitcoin. On what amount should I pay tax? - Tax will be payable on Rs.1000 at 30%. Since Govt. is treating Crypto same as gambling, no deduction will be allowed. This is solely my view. (14/16)

General Note: Ensure you convert the Crypto Income into INR immediately and withdraw the Tax portion. Just a risk mitigation measure :) (15/16)

I have tried to cover all aspects of Tax for FY 22-23 Will make thread on, ✅ Preparing for next year ✅ Tax & GST for NFT Creators/Collectors. This is not a substitute for legal advice. I am a CA Finalist and specializing in Taxation. If you found useful, Do share :) (16/16)

You can read the unrolled version of this thread here: Pls spread the word ser's @pushpendrakum @acryptoverse @DheerajShah_ @SinoGlobalCap @hashed_official @mattysino @sentience420 @sandeepnailwal @crypto_hanuman @BuidlersTribe @PareenL :D



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