Even as the ITR season is going on for the financial year 2023-24, it is necessary to fill the correct form and also mention your income from all sources. Income from cryptocurrency is also mandatory to be mentioned in the income tax return form.
Punit Agarwal, the founder of crypto taxation platform KoinX, lists five best strategies for filing cryptocurrency taxes this season.
He said, “It’s required to file your crypto taxes to ensure compliance with Indian tax regulations. Failing to do so can result in penalties and legal consequences.”
Being compliant with your crypto tax commitments can save you from incurring hefty penalties. So, employ the listed crypto tax filing strategies to avoid any legal complications and file your returns hassle-free. These strategies will even provide you with a better overview of your portfolio, Agarwal said.
Understand Crypto Tax Laws
There is a lot of ambiguity among crypto investors when it comes to tax laws and compliances. You must stay up-to-date with developments in the crypto space through news and government announcements. Crypto events such as trading, staking, and mining are taxable as income tax, whereas holding and transferring between wallets are non-taxable. Moreover, gifting is not taxable for a sender (any amount), but the receiver will have to pay tax if the gift value exceeds Rs 50,000 in a fiscal year.
Another notable fact is that capital gain on cryptocurrency is subject to a 30 per cent tax (plus a surcharge and 4 per cent cess) in India.
Seek Professional Help
A crypto tax professional is one of the most dependable sources of information during tax filing. They will advise on what tax slabs your investments fall into and will help in filing your taxes.
Stay Compliant
Do not try to hide any VDA (virtual digital asset) investments, report your capital gains in scheduled VDA and other crypto income in your ITR.
Know Your Tax Liabilities, File Taxes Based on That
Keep accurate records of all the investments and be ready to face an income tax notice/ scrutiny, if received. With the help of the above-mentioned strategies, you can seamlessly file your crypto tax returns. Maintain clear records of all your transactions, stay up-to-date on all crypto happenings, and seek professional advice to file your crypto returns accurately.
Maintain Accurate Records
It is easy to lose track of your transactions if you have accounts on various exchanges and deal in various cryptocurrencies. Here, a crypto tax platform can help you reconcile all your transactions across platforms easily and accurately.
Maintaining accurate records of your transactions will not only help you understand your portfolio’s performance but also ease your tax calculations.
Tax Software Can Also Help
Good tax software will help you calculate your total tax liability and seamlessly forward all the information to a tax advisor to help with taxes. Moreover, you can download tax reports to understand your crypto taxation better.
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