Sell your crypto assets by 31 March to escape new tax rules

If you are holding cryptos, the current rally is a good opportunity to book profits (or even losses). The government has not accepted any of the suggestions of the crypto industry for amendments in the stiff tax rules laid down in the Union Budget. Crypto investors should sell before the new tax rules come into effect from 1 April.

If an investor sells by 31 March, the gains made in the current financial year (2021-22) will be added to his income and taxed at the marginal rate applicable to him. But from 1 April, there will be a flat tax of 30% on all gains, irrespective of the income level of the investor. Even if the investor has no other income, every rupee earned from cryptos will be taxed at 30%.

Worse, losses from one crypto can’t be adjusted against gains from another. This rule should spur investors who are in losses. If they sell by 31 March, their losses from cryptos can possibly be adjusted against other capital gains.

From 1 April, no such adjustment will be allowed. Tax experts feel the new rules have been framed to discourage investments in cryptos. “It’s a continued effort to isolate and disincentivize crypto currency related activities in India. The prevention of offset between different cryptos will negatively impact traders,” says Rohinton Sidhwa, Partner, Deloitte India.

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