🪙 30% Tax on crypto

Let's boil down the latest tax rate for cryptos in India and how can you escape taxes on cryptos.

Well, now everyone is aware of the recent tech boom - blockchain technology and the cryptos. And if you are unaware of this, then you are missing the boat.

So recently, the union budget bill was passed in India for the financial year 2022-23, and Finance Minister Nirmala Sitharamanh has legalized the crypto exchange in India. I was very glad that this happened because I really felt that India is now able to recognize the next big thing that is gonna boom in the tech industry and legalizing cryptocurrency is one way of saying that India is supporting Web 3.0

🤷🏻 The real catch

But what's the real catch? The budget bill has taxed 30% on the profits from the cryptos. So if you invest 100 INR in one of the cryptos say Ethereum and in the next few days Ethereum grows by 50% and your wallet now holds 150 INR and you decide to withdraw the amount to your bank. Then, you need to pay a tax of 30% on the profit i.e., you will be paying 30% on the 50 INR (i.e. 15 INR) that you made as a profit and not on the entire withdrawal amount.

So the new investors of crypto are baffled by the new tax rebate.

🪄 The Trick

Well, there is actually a trick to get this sorted out and you can escape from this tax rebate without even paying a single penny on your profits.

You basically pay taxes only when you sell those cryptos and you are gonna pay tax only on that profit. So one day, you think you want to take all the profit from cryptos and you decide to sell them on the exchange. Rather than bringing the amount to the bank which will be taxed, you can simply buy stable coins on the exchange such as USDT or USDC. Both are leasing stable coins and they are nothing but cryptocurrencies that are pegged to a fiat currency – the US Dollar. Stablecoins are used by investors to avoid price swings and currency fluctuations.

Hence, the game that you can play is that - don’t sell your cryptos, but instead exchange them for USDT. You can spend those USDT without converting to INR. And yes a lot of businesses accept stable coins.

Moreover, more exchanges like Vauld provide a great fixed deposit for stablecoins. For instance, USDT gives a 12.68% interest rate which is much higher than the conventional fixed deposit.

At the same time are stable coins 100% safe?

No. It can fluctuate according to market conditions. But you won't lose money by converting crypto into stablecoins. And at the same time, you are not paying taxes by doing an exchange.

To add on, the Indian budget bill 2022 has also taxed 30% on digital assets which means whenever you buy an NFT and sell it on a profit, then you need to pay a tax of 30% on the profit. So, the taxation doesn't stop with crypto alone, all the digital assets that are bought and sold are now taxed at 30%.

💰 Bonus

Another way is that - you can use Bitrefill, which allows you to purchase gift cards for various retailers, such as Amazon and Uber, using your Bitcoin. This way, you can spend your cryptocurrency without incurring conversion fees or paying taxes on potential gains.

Similarly, platforms like Destinia allow you to pay for flights, and hotels directly with cryptos. These services provide convenient avenues to utilize your digital assets for everyday purchases and travel expenses while circumventing traditional fiat currency transactions."