Sell your Crypto Holdings by March 31st to Avoid New Tax Laws

If you own cryptocurrency, the present surge is a good time to cash out (or even losses). The government has not accepted any of the crypto industry’s recommendations for changes to the strict tax restrictions outlined in the Union Budget. Crypto investors should sell before the new tax rules take effect on April 1st.

The Indian government has tightened the bolts on cryptocurrency trade. From the taxation of bitcoin gifts to the prohibition of hedging cryptocurrency losses with gains from another digital asset.

By passing the Finance Bill 2022 on Friday, the Lok Sabha adopted taxation laws on virtual digital assets (VDAs) or “crypto tax” proposed in the Budget 2022-23.

Section 115BBH of the bill deals with taxes on virtual digital assets, while clause (2)(b) forbids deducting a loss from crypto assets from income under “any other provision” of the IT Act. In addition, the word “other” is removed from VDAs under the bill.

If an investor sells before March 31, the gains made in the current financial year (2021-22) will be added to his income and taxed at the applicable marginal rate. However, beginning in April, all gains will be subject to a 30 percent flat tax, regardless of the investor’s income level. Even if the investor has no other sources of income, each rupee received from cryptos will be taxed at a rate of 30%.

Worse, losses in one cryptocurrency cannot be offset by profits in another. This guideline should encourage investors who are losing money. If they sell by March 31, their crypto losses may be offset against other financial gains. No such change will be permitted after April 1st.

Furthermore, the bill’s modification orders a 1% tax deducted at source (TDS) on Indians who acquire or trade cryptos, as well as taxes on crypto gifts. Unlike the VDA’s 30 percent capital gains tax, the TDS will take effect in July.

According to tax experts, the new laws are designed to discourage investments in cryptocurrencies.

Cryptocurrency entrepreneurs hoped that the restrictions will be changed.