What is Cryptocurrency?
A cryptocurrency is information, code, or token that exists digitally generated through cryptographic means. It uses the decentralised system to record transactions and issue new units. You can use it in financial transactions or for investment purposes. It can be stored, traded or transferred electronically. People can use cryptocurrency as a store of value like gold or other assets or use it to pay for goods and services.
What is an Cryptocurrency Tax Calculator?
The government has proposed income tax rules for cryptocurrency transfer in Budget 2022. Any income earned from cryptocurrency transfer would be taxable at a 30% rate. Further, no deductions are allowed from the sale price of the cryptocurrency, except the cost of acquisition. Also, you cannot adjust the loss incurred from the transfer of cryptocurrency against income from any other heads. Such losses cannot be carried forward to the subsequent years to adjust the future income earned on crypto transactions.
Therefore, the cryptocurrency tax calculator helps the taxpayer calculate the tax payable amount by applying the relevant income tax rules.
How to Use the Cryptocurrency Tax Calculator?
In the utility tool given, enter the sale price of the cryptocurrency transferred and the cost of acquisition of the same. The utility tool will show you the income tax liability amount you must pay on the given cryptocurrency transaction.
It is important to note that you are also liable to pay the appropriate surcharge and cess over the amount of tax liability calculated in the cryptocurrency tax calculator.
The details should be entered transaction wise in the cryptocurrency tax calculator instead of aggregating the figures for the whole year. Also, the purchase cost should not include any other expenses. The income tax rules do not allow any deductions from the sale price of the assets except the purchase cost.
Benefits of Using a Cryptocurrency Tax Calculator
The utility tool allows you to calculate the amount of tax on cryptocurrency transactions in two simple steps. The tool applies all the relevant tax provisions and provides you with the correct tax payable on cryptocurrency transactions.
