2022 crypto taxes

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When do U. Capital gains tax events involving cryptocurrencies include: Selling cryptocurrency for fiat U. Purchasing goods and services with cryptocurrency, even small purchases like buying a coffee. Trading or swapping one digital asset for another.

This includes purchasing NFTs using cryptocurrencies. This is calculated as the difference between the price paid for the asset and the price it was sold at. The IRS has also not yet provided clarity on whether minting tokens — including creating wrapped tokens, publicly minting NFTs or minting interest-bearing assets — creates a taxable event or not.

Nor is it clear at this stage whether depositing of withdrawing liquidity from DeFi liquidity pools using liquidity provider LP tokens is considered a crypto-crypto transaction. Income tax events include: Receiving cryptocurrency from an airdrop. Any crypto interest earnings from DeFi lending. Crypto mining income from block rewards and transaction fees. Crypto earned from liquidity pools and interest-bearing accounts. If you received the gift from a direct family member, such as your parents or grandparents, the gift is considered tax-free independent of the value.

While there is no specific mention of this in the Finance Bill, we can only assume that the tax-free gift law also applies to cryptocurrencies as it stands today. Tax status: Income tax depends Cryptocurrency losses India Until recently, it was not clear whether or not you were allowed to use cryptocurrency losses to offset your gains, but this has now been clarified in the new Finance Bill. Unfortunately for Indian tax payers, the current tax rules do not allow offsetting your gains with your losses or carry your losses forward to future years.

This is what the new Finance Bill states in Section BBH: a no deduction in respect of any expenditure other than cost of acquisition or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the income referred to in clause a of sub-section 1 , and b no set off of loss from transfer of the virtual digital asset computed under clause a of sub-section 1 shall be allowed against income computed under any other provision of this Act to the assessee and such loss shall not be allowed to be carried forward to succeeding assessment years The only cost you are allowed to claim is the actual cost of acquiring the cryptocurrency — typically referred to as the cost basis.

Can the ITD track my crypto? Yes — the Income Tax Department in India may very well track your cryptocurrency related transactions and the amount of crypto assets you hold on exchanges and in wallets. Tax authorities have access to this information through Know-your-customer KYC policies enforced by cryptocurrency exchanges, with local exchanges in India being no exception to this.

There exists also several global initiatives that enforce private companies to share data about their customers to tax authorities around the world as part of fighting money laundering and other criminal activities. How to calculate crypto taxes in India If you are an Indian taxpayer and have transacted with cryptocurrency during or , you need to calculate the realized gains and income from all transactions.

There are essentially two different ways to go about this — either manually or using a crypto tax calculator. This includes also transactions from or to your own wallets. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically: 1. The free plan lets you explore and use all features for free. The Coinpanda dashboard page 2.

You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda does not support an exchange you have used, reach out to us so we can add the integration — usually within a few days. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions!

This might take anywhere from 20 seconds to 5 minutes depending on how many transactions you have. Check for any reported warnings Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price.

If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts. Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat.

Download your tax reports and tax forms When you have successfully imported all transactions, the final step is to download the tax reports you need to file your taxes in India. Crypto tax deadline in India There are two important time periods to be aware of that are relevant for filing your taxes.

The financial year FY : Same as the fiscal year which runs from April 1 to March 31 the following year The assessment year AY : The time period during which you have to report and pay your taxes for the previous financial year The most recent financial year ran from April 1, to March 31, , and is often simply referred to as FY Similarly, the current assessment year for the previous FY is often referred to as AY The tax deadline for reporting your crypto taxes as part of the AY is July 31st, However, if you are subject to a tax audit for the previous FY, the tax deadline is October 31st, instead.

However, a conservative approach is to report your AY taxes according to the rules defined in the new Finance Bill.