Planning to Invest In Crypto? Key Things You Must Know Before Buying Bitcoin In India

Crypto investment in India: From cricketers to Bollywood stars, the buzz around cryptocurrency has reached new heights. Bitcoin’s value is around Rs 82,96,954, having surged more than 42 per cent since the US election results and Donald Trump’s victory.

Also, Elon Musk ’s involvement in Trump’s administration caused Dogecoin to soar with a 122 per cent return in just a few days.

As cryptocurrency continues to grab attention, the question arises: Is it time to move away from traditional assets offering 7-8 per cent returns and dive into the world of digital currencies?

While the promise of high returns is tempting, there's an important aspect that investors need to be aware of—taxation on cryptocurrency investments in India.
 

How is cryptocurrency taxed in India?

Flat 30% tax rate

The Indian government has imposed a flat tax rate of 30 per cent on any income derived from the transfer or sale of cryptocurrencies, irrespective of the holding period.

This means that whether you hold your digital assets for a few months or several years, the tax rate remains the same. If you make a profit of Rs 1,00,000 from selling Bitcoin, your tax liability will be Rs 30,000.

No deductions allowed

Unlike other asset classes where deductions for transaction costs or exemptions may apply, no such deductions are permitted for cryptocurrency transactions. The entire profit is taxable at the flat 30 per cent rate.

TDS (tax deducted at source) on crypto transactions

Additionally, the government has introduced a Tax Deducted at Source (TDS) of 1 per cent on cryptocurrency transactions exceeding Rs 10,000 in a financial year. This means that the seller or transferor is required to pay 1 per cent TDS on the sale amount to the government, and the buyer is also responsible for deducting this TDS.

No loss offsets in crypto

You can’t offset losses in one crypto against profits in another. So if you make a Rs 1 lakh profit in Bitcoin but lose Rs 50,000 on Ethereum, you’ll still be taxed on the full profit without considering the loss.
 

Is it time to reconsider crypto investments in India? While the space is growing with big companies like Microsoft and PayPal accepting cryptocurrency as payments, it's important to weigh the risks.

Crypto's extreme volatility can see assets drop by 20-30 per cent in a single day. Additionally, while crypto may appreciate, it comes with major tax implications, lack of utility for payments, and regulatory challenges in India.

Investing in crypto might sound enticing, but it still has a long way to go in terms of stability and acceptance. Make sure to consider all factors before parking your money.

Also Read: BTC Price: Bitcoin Hits $94,000-Mark For First Time, Here’s Why | Republic Business