Thread by @0xSonuJain

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: typefully.com/0xSonuJain/Sxq…

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