In the last decade, we have experienced major growth in the crypto space around the world.
According to the website CoinGecko, the valuation of cryptocurrencies surpassed $3 trillion as of November 9, 2021.
Bitcoin – by far the biggest cryptocurrency grew more than a third of that, while the next biggest coin Ethereum, got up by around 18 percent.
So, if you are one of those people who have made investments or have been exploring ‘cryptocurrency’ as an asset class, the new crypto budget has cleared the provisions regarding taxation on cryptos.
Though, there are still some stark question marks over how these provisions will play out.
Experts say that one can balance the losses incurred from crypto trading against the crypto gains during the same financial year. Ultimately, the government has indicated that crypto trading is not illegal, and it does not want to encourage it either.
So, let us try to understand it deeply at what level the budget has now made the big canvas clear on cryptocurrency.
PDA on cryptos: Govt. calls it VPA now.
If you are a crypto enthusiast or investor, the budget has now unfolded guidelines and regulations about it.
Finance Minister Nirmala Sitharaman announced that income from cryptocurrencies would have a tax of 30%.
Therefore, cryptocurrencies have now been put under Virtual Digital Asset (VDA).
Book your profits before March 31 if you’re not bullish
Since the new taxation law will come into force from April 1, 2022, certain things are very clear – unless you are highly bullish on your crypto investment, liquidate them to book your profit now, so that you can explore options for saving potential taxes.
Ultimately, It’s not clear whether normal capital gains rate or the new rate will be applicable retrospectively. The budget discussions will further clarify on this in the coming days.
Although there is a panic situation among the crypto community, it is advisable not to do things out of excitement or rumors. You have enough time to book profit or hold [if you’re highly bullish]. With that said, thanks for reading this article.