Crypto Tax
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Know everything about taxing in cryptocurrency: Crypto Tax Calculator
Do you know cryptocurrency is evolving with great potential to grow and generate income? The number of crypto users is estimated to increase to 1 billion by 2030. The future of cryptocurrency is exciting and promising but when the tax season rolls out it becomes a headache. The cryptocurrency tax laws in India are new and a bit complicated. The government has applied taxing up to 30% on crypto gains with several other taxes and situations. The tax law on crypto gains was passed in 2022 by the Indian government. The taxes applied to the cryptocurrency gains are new to Indian crypto users and filing the tax can be confusing. A cryptocurrency tax calculator will help to understand tax obligations to gain profit and avoid penalties. Here we will discuss the crypto tax calculator, a method to calculate crypto tax, and the advantages of a crypto tax calculator.
Why is crypto income taxable in India?
Although cryptocurrency is not considered legal tender it is taxable income because of several regulations.
- The Indian government views cryptocurrency as an asset that can generate income because you can trade or sell it for profit. You will get stock, bond or capital gains so it comes under taxable income.
- Cryptocurrency tracking is important to tame illegal activities. Taxing crypto transactions will help to detect any large movement of assets and evasion to build transparency in the market.
With the proper knowledge of tax laws in India and using a crypto tax calculator, you can stay one step ahead, especially during tax season.
What is a Crypto tax calculator in India
A cryptocurrency tax calculator is an app that makes it easier to calculate cryptocurrency taxes by abiding by the rates and laws of the country. There are a lot of online Crypto tax calculators free or paid apps available online that will help you calculate the capital gains and losses on cryptocurrency transactions. You need to enter basic purchase details and sale price transaction dates to determine your tax liabilities for your income tax return.
Why should you use the FirstFiling crypto tax calculator in 2024?
The cryptocurrency was introduced over a decade and it gained recent recognition as a good income-generating source. Because of less familiarity with cryptocurrency tax filing, it is an exhausting task. Here are some other reasons to use a free crypto tax calculator in India.
- It saves the time and effort of manually tracking the crypto transaction. It will automate the process to save you valuable time and frustration for a much easier and smoother process.
- When you are calculating crypto taxes it can get complicated. However, using a cryptocurrency calculator INR will give accurate results to minimize any chance of error or penalties from tax in India.
- It will give you peace of mind because you know your crypto tax situation.
- During the tax season, you will be confident and clearly understand your tax obligations.
The calculation will be easy if you are familiar with the cryptocurrency laws.
How to calculate cryptocurrency tax?
When you are dealing with cryptocurrency you should also know about filing taxes on crypto transactions. You can use crypto tax calculator software for calculating crypto taxes or use this calculation method for manual calculation.
Calculating cryptocurrency tax in India with the First Filing crypto tax calculator requires inputting the mentioned information with the following steps.
Step 1: Determine the type of cryptocurrency transaction
The first step is to determine the source of cryptocurrency you gain. Here are some examples of tax applied based on the source of transaction of cryptocurrency.
- Buy/Sell is counted as capital gains
- Gifts/Inheritance are exempted
Step 2: Calculate Capital Gains (for Buy/Sell transactions)
The next step is to calculate the capital gains after buying or selling. While calculating crypto taxes you can determine the capital gain by determining the purchasing value and the selling value of the crypto income and using the formula.
- Purchase Price (Cost Basis): INR value of cryptocurrency at the time of purchase which is used to calculate capital gains. Eg. Rs.500,000 is the buying price of 1 Bitcoin.
- Selling Price (Sale Value): INR value of cryptocurrency at the time of sale. The value can increase or decrease according to the current value in the market. Eg. Rs.700,000 is the selling price of 1 Bitcoin
- Capital Gains: Sale Value - Cost Basis. Rs.(700,000-500,000) = Rs. 200,000 This formula is used to calculate capital gains.
Step 3: Apply Tax Rates
For cryptocurrencies in India, the gains are taxed at a consistent rate irrespective of the holding period: .
- Tax Rate: All capital gains from cryptocurrencies are subject to a flat tax rate of 30%, plus an additional 4% cess. This results in an effective tax rate of 31.2%.
If you realize a gain of ₹200,000 from selling your cryptocurrencies, the tax calculation would be as follows:
Tax Payable = ₹200,000×31.2% = ₹62,400
This tax rate applies to all cryptocurrency transactions, regardless of how long you have held the assets. This simplification in the tax structure ensures that all gains from virtual digital assets are treated uniformly under the tax laws.
Additional Considerations- TDS Requirement: Remember that a 1% TDS (Tax Deducted at Source) is applicable on the transfer of crypto assets under certain conditions, which should be factored into your financial planning and tax compliance.
Step 4: Add Surcharge and Education Cess
After determining currency transactions calculating capital gains and tax rate you need to calculate surcharge and education cess on the total amount.
- Surcharge: 4% of tax amount
Eg Rs.60,000*4%= Rs.2,400
Rs 40,000*4%= Rs.1,600
- Education Cess: 2% of the tax amount
Eg Rs.60,000*2%= Rs.1,200
Rs 40,000*2%= Rs.800
Step 5: Calculate Total Tax Liability
This is the total tax liability formula which includes the Tax amount surcharge and education cess
Total Tax = Tax Amount + Surcharge + Education Cess
Eg Rs. 60,000+Rs.2,400+Rs.1,200= Rs.63,600
Rs. 60,000+Rs.1,600+Rs. 800= Rs.42,400
#Crypto
How to find a good Crypto Tax Calculator app?
The crypto tax calculator online might look the same because they all are created with equal formula features and laws to abide by the country. But some features distinguish one app from another and provide you with better services. These are the features you should look into in your crypto tax calculator app.
- Security: One of the important things that one should look for in a tax calculator is its security measures. The information you are providing to the calculator is sensitive financial data which should be protected properly. The first filing crypto tax calculator is secure and never leaks any data.
- Tax rules updating: Although every calculator is abiding by the tax rule it is important to know if your calculator app is using updated tax regulations for crypto. It will ensure the accurate calculation of tax on crypto gains.
- Integration: You should look at whether your calculating app is integrating the popular cryptocurrency exchange and wallet to make it easy to understand your country's currency.
- Free or paid option: The free version includes basic functionality while the paid version has a crypto tax calculator cost added while purchasing the software.
Conclusion
The cryptocurrency world is exciting until you have to pay taxes over them. It is important to know crypto tax regulations and the use of a crypto tax calculator to enjoy the same exciting level of using cryptocurrency. In India, the generated income through cryptocurrency is taxed as a form of asset-generating income. The rules and regulations are tough, you need to use a crypto tax calculator online as a navigating friend to automate the complex process of tax liability and other transactions.
The crypto world is as vast so you need to understand the complexities of cryptocurrency to avoid any further problems like illegal transactions and tax evasion. The government has put strict laws on crypto transactions and taxes to avoid these illegal activities.
It is a powerful tool but it cannot replace professional advice. For a difficult tax situation, you need to have a qualified tax advisor who is familiar with the cryptocurrency regulation of Indian income Tax law to give you personalized guidance.
Frequently Asked Questions
A flat 30% tax is applied to profits from crypto transactions, with an additional 4% cess bringing the effective rate to 31.2%. There's also a 1% TDS deducted at source for transactions exceeding a certain limit.
All crypto transactions are taxable, including trading, selling, spending, receiving gifts exceeding a limit, and airdrops with a value exceeding the limit.
Unfortunately, no. Crypto losses cannot be used to reduce your tax burden on other income sources. Additionally, there's no mechanism to carry forward losses to future tax years.
It's an online tool that simplifies calculating your crypto tax liability. You input transaction details and the calculator estimates your tax owed based on relevant regulations.
You provide details like transaction type, date, amount, and purchase/sale price, and the calculator uses this information with tax rules to determine capital gains/losses and estimate your tax liability. It may also offer reports summarizing your transactions and tax estimates.
No. Even if it is a valuable tool, it shouldn't substitute professional advice for complex tax situations. Consult a qualified tax advisor familiar with cryptocurrency regulations in your region.
Yes, you should have to pay taxes on the money made from cryptocurrency over £6,000 in the UK.
For capital gains from crypto over the £6,000 tax-free allowance, you'll pay 10% or 20% tax. For additional income from crypto over the personal allowance, you'll pay between 20% to 45% in tax.
You pay tax on the money made from cryptocurrency in India.