#CryptoTax
Everything you need to know about 🇮🇳 Crypto Tax for FY 21-22
🧵 Covers:
⚡️Salary
⚡️Consultancy
⚡️Airdrops
⚡️Mining
⚡️Yield farming, Staking, Lending, Interest
⚡️Trading/Investing
⚡️Borrowing
⚡️NFT
@simplykashif @CryptooAdy @NischalShetty @cz_binance
Let us re-cap few concepts:
Capital Gains (CG)
⭐ Crypto profits may be taxed as CG
⭐ CG are of 2 types: Short term (STCG) & Long term (LTCG)
→ Sold crypto within 3 years of buying = STCG, Tax at Slab rate
→ Sold crypto after 3 years of buying = LTCG, Tax at 20%
(2/15)
🤔 How to calculate STCG?
⚒️ STCG = Sale Value - Buy Value - Expenses
💰 Sale Value = Sale price x Quantity
💸 Buy Value = Buy price x Quantity
Expenses = Brokerage, Network fees, Gas fees, Royalty etc.
(3/15)
🤔 How to calculate LTCG?
⚒️ LTCG = Sale Value - *Indexed* Buy Value (IBV) - Expenses
💰Sale Value = Sale price✖️Quantity
💸IBV = Indexed Buy price*✖️Quantity
(*explained next)
Expenses = Brokerage, Network fees, Gas fees, Royalty etc.
(4/15)
🤔 What is Indexed Buy Price?
👉 Indexation means adjusting the cost to match inflation
👉 In Long term assets: Cost is adjusted for Inflation between Buy year and Sale year
⚒️ Formula = Buy Price✖️Inflation Index in Sale year ➗ Inflation Index in Buy year
(5/15)
Let's analyse each transaction:
1. Salary received in Crypto
Tax events:
👉Receipt of Salary: Market value (MV) of Crypto on date of receipt taxable as Salary at *Slab rates*
👉Sale of Crypto: Tax as per STCG/LTCG as applicable on gains
(6/15)
2. Consultancy charges received in Crypto
Tax events:
👉Receipt of Crypto: MV of Crypto on date of receipt taxable as Business Income at *Slab rates*
✅Expense - allowed if incurred in INR
👉Sale of Crypto: Tax as per STCG/LTCG as applicable on gains
(7/15)
3. Airdrops:
Tax events:
👉Receipt of Airdrop: MV on date of receipt taxable as Other Income at *Slab rates*
✅Expenses like gas fees can be deducted.
👉Sale of Crypto: Tax as per STCG/LTCG as applicable on gains
(8/15)
4. Mining Income:
Tax events:
👉Receipt of reward: MV on date of receipt taxable as Business Income at *Slab rates*
✅Expenses like gas fees, mining equipment, electricity can be deducted.
👉Sale of Crypto: Tax as per STCG/LTCG as applicable on gains
(9/15)
5. Yield Farming/Staking/Lending/Interest Income:
Tax event:
👉Rewards claimed*: MV on date of claiming taxable as Other Income at *Slab rates*
✅Expenses like gas fees can be deducted.
👉Sale of Crypto: Tax as per STCG/LTCG as applicable on gains
(10/15)
6. Trading/Investing:
✅ Taxes at Slab rate for STCG & 20% for LTCG
✅ Loss Set-off allowed
✅ Deduction for Brokerage, Interest, gas fees etc.
🚨 Disclose in ITR as Capital Gains
(11/15)
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.
(12/15)
8. NFTs trading:
✅ Tax at Slab rate for STCG & 20% for LTCG
✅ Loss Set-off allowed
✅ Deduction for Brokerage, Interest, gas fees etc.
🚨 Disclose in ITR as Capital Gain
(13/15)
Important points: Capital gains for FY 21-22
👉Can we set-off loss: ✅
👉Can we carry forward loss: ✅
👉Can we set-off crypto loss of 21-22 with "Crypto gains of 22-23? ❌
👉Can we set-off crypto loss of 21-22 with Capital gains "other than crypto" of 22-23? Yes✅
(14/15)
Tried to cover all aspects of Crypto Tax for FY 21-22😄
⚠️This thread is based on my expertise in Taxation & not legal advice
🚨ITR filing last date is 31 July. If you need help in Tax calculation & IT return, please fill this form or DM: forms.gle/q24oGXqeD8x52xsn6
(15/15)