Hello, I have a query regarding the taxation of cryptocurrency trading in India. If I were to deposit 1 lakh INR into a cryptocurrency exchange like Binance and participate in both spot and futures trading, resulting in some profits and some losses, I'd like to understand how the taxation process works. Is tax calculated on the individual profits made during trading, or is it applied when I withdraw the funds to my bank account? Furthermore, could someone please explain the current tax regulations for cryptocurrency trading in India, including the potential 30% tax rate and TDS, and how these rules are applicable in this scenario?
Intraday Trading Tax for Crypto
- Thread starter khanra17
- Start date
luciferocious
KF Mentor
as per my knowledge its 30% flat + cess on profit earned after transaction whether you withdraw to account or not
Thank you for the information provided earlier. I still can't understand. Just to clarify, if I were to deposit $100 into a cryptocurrency exchange and engage in two futures (intraday) trades, where one trade resulted in a $10 profit and the other in a $10 loss, without withdrawing the funds to my bank account, how would the taxation work in this scenario? Specifically, would I still be subject to a 30% flat tax rate plus cess on the profit, even if I don't withdraw the funds to my bank account?
luciferocious
KF Mentor
Long-term capital losses can be offset against long-term capital profits under existing tax laws. It exempts taxpayers from paying long-term capital gains taxes. However, in the case of crypto revenue, this will not be possible. Losses from the sale of digital assets cannot be offset by other income. It will be treated as a separate class of asset.
I think losses cannot be negated for trades
sundernarwat
KF Ace
As per taxation law applicable on Indian Exchanges
1% TDS on every sell trade ( Both profit and loss trades )
Flat 30% tax on every sell trade (Profitable trades only )
In your case, its is a foreign exchange, and they are not following TDS Rule, also they are not sharing income data with Indian income tax department, so you are not subjected to pay 1% TDS & 30% tax on gains
After gains if you withdraw cash to your account, then this amount will be considered as regular income until you yourself do not declare it as crypto gains income
Note: Very soon foreign exchange will provide all data to governments, so later tax liability may came with penalties
If above case was on Indian exchange
Then you were liable to pay 1% TDS of total sell trade amount (at selling time ) + 30% of profits made (10$ you mentioned ) so tax is ( 3$ at the income tax filling time )
Hope this clarifies you query
Tax with Ria
KF Expert
Hi,
Sorry for replying so late.
Currently Crypto currency gain is flat taxable @30 % u/s 115BBH. TDS is deducted u/s 194S @1% on sale value of Cryptocurrency as it will reflect in your 26 AS.
Taxable income= Sale Consideration - Cost of Acquisition (without indexation benefit). Further any losses from futures and options/equity shares/loss of any head cannot be set off from Cryptocurrency gains.
TDS is deductible when you sale any Cryptocurrency irrespective of the fact that you withdraw to your bank account or not. Hence you'll have to submit self assessment tax or advance tax @30% on gain of Cryptocurrency even if you didn't withdraw to bank account.
No deduction of 80C, 80D, 80CCD etc and no benefit of basic exemption limit i.e 250000.
Gain from Cryptocurrency is taxable under head "Income from other sources"
Tax with Ria
KF Expert
Sir, everyone's is trying to give you solution but if you need so precise solution then meet a CA.
In your response to query, if you've submitted 1lakh to crypto fund, which is used in trading of shares, which resulted in profit. Then this profit is also taxable as Cryptocurrency gain @30% and not as usual capital gain @ 20%. In case of losses from such trading of shares, it's treated as Cryptocurrency loss and it's a dead loss, you can not set off from any income.
Tax with Ria
KF Expert
Even if he doesn't declare information, then also Mr.Khanra's 26AS will reflect TDS under 194S because even if it's traded in foreign currency. But the payment channel gateway is online gateway which is automatically linked to PAN. So Khanra ji has to pay self assessment tax or advance tax. Even if he tries to evade from taxes for any F.Y but if CBDT issues notice then it can issue notice for past 8 years of income declaration and payment of tax dues and penalty.
