Well, since the budget has been announced, everyone is talking on the internet about cryptocurrency. People are talking that cryptocurrency has become legal in India. Is it really legal? I did not know. Who told you that it has become legal? Tell me-too. Okay, Nirmala Sitaraman told that it has become legal. Oh, she did not say anything like that. In fact, 30%tax is to be paid on cryptocurrency. You people are saying that lot of people are talking on the internet. 30% tax is to be paid.
Is it really to be paid? You will have to pay 30% tax. Okay, since when will you have to pay? There are many questions, you may have in your mind. I am coming. We are going to talk about taxation. And now we are going to talk about the thing that has been announced in the budget that cryptocurrency is not a currency. Nirmala Sitaraman clearly said that the currency is only the one that Riis issuing in India. When RBI will bring its digital currency, it will give clarity theatric is going to bring digital currency.
This is for sure. I twill only bring a virtual currency and the cryptocurrency that people trade in it will go into the asset class. Now what difference does it make to you? I will tell you what difference it makes to you. The second thing that people are talking about is that it has become legal. The answer is no. Itis not written anywhere that cryptocurrency has become legal in India.
Yes, this is definitely being said that if you are being taxed and you are paying tax, then it is not illegal either. It is not illegal. It is a little understandable that it is not legal, but itis not illegal either. People were afraid in the middle. The Bitcoin market had crashed. When the crypto market crashed, people were thinking that I don’t know what will happen. It may not be banned.
But now people are understanding one thing that if tax is being taken, then we cannot call it illegal. Now let’s understand the things here. See what happens if you go to the correlate and you go there and say that you win 20,000 or you win 1 lakh. If you have won money there, you have won crore, then regardless to your slab, in which income slab you come, you have to pay tax of 30% there.
So if you have won 20,000 from there, then you have to pay 6,000 tax. Now, the tax imposed here is because India’s 8% population is investing in cryptocurrencies and more than₹ 70,000 crores have been invested in cryptocurrencies. So if the government is playing a smart move here, now it has not said legal, but it has brought tax that tax on every transaction You understand tax on every transaction. Now I will explain it. Now we will understand step by step what happened. One thing is clear that it is not legal, but it is not illegal now. If you are ES, it is not illegal. If you want, you can invest money. You can invest and you can do everything if you have faith in cryptocurrencies.
And the second thingies that you understand is taxation. Before this, when I made the blog, I told you some basic things that you will have to understand the long-term capital gain tax. You will have to understand the short-term capital gain tax. I told you that if you invest in stocks, then you pay STT there, which is known as security transaction tax. And if we talk about stocks in which we had paid STT, then in the long term, we have to pay tax only according to 10% and according to 15% in the short term. This is our talk about stocks, but when wearer talking about crypto, then what happens here?
First of all, in stocks, the long term is considered more than 1 year. Long term more than 1 year, short-term within 1 year. But now if we talk about crypto, then what is in crypto, that the long term will be considered after 2 years. Whatever will happen before 2 years will be short-term.
In short term, tax was being taken from you as per 30% and according to long-term, you had to pay tax according to 20%. So if you were sitting with Bitcoin in Ethereum for 2 years, then whatever gain you have, you had to pay tax according to 20% and if you have gained in the short-term, then according to 30%.
Now, this 30% tax that you had today, it is definitely asper your tax slab. But one more thing was that if you trade in stocks, if you trade in the stock market, if you trade in the crypto market, then that business income will be minus. Now what is business income, if I have income from business, then I can minus the expense from it and whatever net profit I have left, I have to pay tax on it.
Now the things we are saying, they are valid now, till this financial year.
Now the budget that comes, whenever the budget comes, it is valid from the coming financial year. So now whatever things are there, which we will understand according to 30% that what is the thing, till now, you have to file your taxes according to this tax slab and from 1st of April 2022, this tax slab will change. What does it mean?
Let’s understand this. See, you don’t have to be afraid now. Those who are afraid that I have to pay 30%tax, I have to pay, I have to pay, from 1st of April 2022, means from 1st of April 2022, you will have to pay 30%tax. We will explain that now. But before that, I will tell you one thing. Some people are thinking that I have made a profit of 10,000, 20,000, 50,000,1 lakhs, 2 lakh income cryptocurrency. So if you have made a profit, then understand my point carefully. You book your profit.
Once you send your money, whatever your crypto is, and whatever your money is, if you want, you can keep it in your wallet because you have sold it. If you want, you can take it back in your account and buy that crypto again. Now what am I saying? What did I say? I will explain quickly. Let’s assume that you had invested in some cryptocurrency, you had invested 100 rupees. Now it will be 200for 100. I am giving an example; it can be 1 lakh. So your 100 becomes 200 or 1 lakh becomes 2 lakhs. I am telling you, you take out this 2 lakh rupee. You sold it, you made cash and I told you that you can buy it again.
You will say that there will be some charges, there will be exchange charges, there will be transaction charges, there will be some charges, but I told you that you took money in the bank once and bought it again. Now what will happen with this? Now what will happen with this? Why did we do this? Because if you have done the something, you have done the same process, you have invested 100rupees somewhere and it becomes 200 and after that you sold it, but you sold the something on 1st April 2022or after that.
So whatever your money has increased, 100 becomes200, means you have profit of 100 rupees, you have to pay 30% tax on it. This means that if you have a profit of 1 lakh, then you have to pay 30,000 tax plus surcharge Andes will also be applied.
So that is also applied. I do not have to pay 30% tax; I have to pay more than 40%. Sosa per my tax slab, because surcharge increases, chess increases, so I am giving you an example. Now I am telling you this thing, if you have done this processing February or March, then what will happen to you, this 30% application of the budget invalid from the 1st of April. Before that, what you are doing, you will file your as per tax slab. This means that if your income is less than 5 lakhs, then you are legally going to pay 0 tax, but itis subject to dispute. Now what did I say, it is subject to dispute.
Brother, this Isa big market, this is a cryptocurrency market and the talks are going on, talks about bringing regulations are going on, all these are new talks. So it is possible that there can become dispute in this. So you can talk to your CA about it, so they can give you more clarification. If you have made a very big profit, then you can definitely consult your CA, but the very small players in the market who have made a profit of 10,000,20,000, 50,000, lakhs,2 lakhs, 5 lakhs, so they need not to worry that much. According to their tax slab, you can file your tax here and if your income is less than 5lakhs, then you do not have to pay tax here legally, but again it is subject to dispute.
Now let’s talk about what will happen after the 1st of April 2022.Now what will happen from this year, whatever transactions you are doing, if you have bought to crypto here and you have already bought it, or if we talk about April, then all your transactions are happening in today’s date, you will say that how will the government know, your PAN card has already gone, your KYC has already been done, you had given your Aadhar card, the government can fetch all the details, so you cannot hide and do not hide at all, because if you try to hide or you do not file your tax, then 300% of the penalty can be imposed.
So don’t do this. Now let’s move forward, we understand that you have bought a crypto of ₹ 10,000 and it has become ₹ 30,000,so what will happen now, now you have a profit of ₹ 20,000, you will have to pay tax of 30% on this ₹ 20,000,the matter does not end here, you will get 30% and you will have to pay tax of ₹ 6,000.Some people ask that will my ₹ 6,000 be deducted from there, will the money come after deducting it, no, the money will not come after deducting, this money will come to you, but it will become your liability that if you have made a profit, then you have to pay tax.
Now in India, many people do not file ITR, many people do not show, so you will have to do it from now on. If you are invested in crypto, then this is a masterstroke of the government. Every small man, every big man who is trading in crypto, he will have today ITR here. If he has made profit of 100, then you cannot hide the profit of 100, you will have to show it’s what do you have to do here, you have to pay tax here after1st of April because every penny will be taxed. Now there is one more thing, let’s say you gift your friend with crypto, then what will happen, let’s understand this too.
If you gift your friend with crypto, let’s say you send a crypto of filing.₹ 1 lakh to your friend, then the friend who will get a crypto of 1 lakh, he will have to pay a tax of 30%. Okay, this is not according to money. If I have sent my friend, let’s say my friend Rahul has sent him 1 lakh, then he can return me 1 lakh, so Rahul will not have to pay any tax. But here as soon as I sent him a crypto of 1 lakh, now whether he returns it or not, he has to pay a tax of 30%.
If he returns it, nowhere more people, understand anyway, a crypto of 1 lakh has come to you from your friend, it has come again. Now this 1 lakh has come from your friend, now you have today a tax of 30%. Tax of 30%is there and here, so much tax. Yes, the government is taking so much tax from you.
The thing does not end here. Here the government has also putts. Whatever money you are going to withdraw from the exchange, your TDS will be deducted format. Now what is TDS? Demeans Tax Deducted at Source. What does it mean? Suppose I buy property, so the sellers buying the property, the property is being sold. When I pay it, I deduct TDS and pay it. So here also you are selling the asset that you are selling and taking your money back.
You are selling, you have become a seller. So when the exchange will give you money, then there it will deduct 1% tax. Yes, this 1% that is deducted by your exchange, when you file your ITR, then you can also take a refund, then youkan take back your TDS. You have to file ITR. Now this will be beneficial again. I told you that 8% people are invested in crypto in India.
How much benefit is going to be to the government? If these people have to take back their TDS, then they will have to pay Tires this is the master stroke of the government. If you have taken a bitcoin of 1 lakh, or you have taken a coin and sold it, you are taking 1 lakh in the account, then you will get only 99000 in the account. That 1000 has gone to the government. You will have to take it back from the government when you file your ITR. So now ITR filing will also increase from here. Now see why I am telling you all this, because the things we file regularly, we pay tax, so as a businessman, I know a lot of things because of practical experience.
Look, I have clearly said to my CSA that whatever crypto-related income I am getting, you pay tax on it straight away. So it didn’t make any difference to me. Why it didn’t make a difference, I tell you, I come to the tax lab above 30% earlier. So 30% plus surcharge and chess is also applied, so you have to pay more than 30% tax, which I am already paying. So it doesn’t make a difference to me, but it will make a difference to many people, who are getting initial income, so it can make a difference totem.
The second thingies TDS, don’t be afraid of this at all. If you are afraid of1%, then I will tell you that we get such payments from many places, in which 10% Tosi’s also deducted. So it doesn’t make any difference to me because I already know that I have to pay tax. If I have today tax and if my tax is already being collected, then my burdens reducing. So this is my own psychology, which I have told you.