Crypto Taxation Made Simple: Key Rules and Strategies for Indian Investors in 2024
Taxation Overview : Capital Gains Tax : Cryptocurrency transactions fall under the category of capital assets. When you sell or exchange cryptocurrencies, you generate capital gains. There are two types of capital gains: short-term (if you hold the asset for less than 36 months) and long-term (if you hold it for 36 months or more). Short-term capital gains are taxed at your applicable income tax slab rate (up to 30%). Long-term capital gains on cryptocurrencies are taxed at a flat rate of 20% with indexation benefits. Indexation adjusts the purchase price for inflation, reducing the taxable gain. To calculate long-term capital gains, use the following formula: Long-Term Capital Gain = Selling Price − Indexed Cost of Acquisition − Indexed Cost of Improvement The indexed cost of acquisition and improvement accounts for inflation over the holding period. Mining Income : If you mine cryptocurrencies, the income generated ...