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The demand for cryptocurrencies is on a roller coaster ride this year due to the bearish bandwagon in the global market. By end of the second quarter of 2022, emerging markets currently dominate cryptocurrency adoption, and India ranks fourth. Cryptocurrencies continue to be among hot topics for investment options despite their complexity, and high sentiment-driven nature. Cryptocurrencies are risker than stocks. However, this market has shown a unique form of investment in digital currencies and many are still hoodwinked by its charm. Just like every other investment in market-related instruments, cryptocurrencies also have a host of tax rates that an investor will have to pay on their transactions. However, some tax reliefs are applicable especially for crypto assets like airdrops, savings accounts, etc.
With effect from April 1, the Indian government has levied a 30% tax rate on virtual currency assets followed by a 1% TDS that came into force from July 1 this year. TDS will not be deducted on consideration of ₹10,000 and ₹50,000 depending upon the specified investors under the tax brackets.
Vaibhav Gupta, Co-founder, TaxCryp Technologies said, “Tax planning for transactions involving the transfer of cryptocurrencies is a bleak possibility since the government has come up with a rather water-tight taxation regime of 30% tax on all gains with no set-off for loss transactions.”
Gupta added, “However, the unilateral receipts from crypto assets such as airdrops, interest from deposits, etc. should be taxed at the applicable slab rate of a taxpayer rather than the maximum rate of 30%, thus providing some tax relief to crypto investors.”
As per Chainalysis Global Crypto Adoption Index report for the second quarter of 2022, India is currently at the fourth rank in cryptocurrency adoption, following Ukraine, Philippines, and Vietnam which holds the top spot for the second time in a row.
Chainalysis report last month said, “while growth has become more sporadic with the onset of the latest bear market, global adoption remains well above the levels that preceded the 2020 bull market.”
It added, “The data suggests that a critical mass of new users who put capital into cryptocurrency during periods of price growth tend to stay even when prices decline, allowing the ecosystem to consistently grow on net across market cycles. One reason for this could be the value that users in emerging markets get from cryptocurrency. These countries dominate the adoption index, in large part because cryptocurrency provides unique, tangible benefits to people living in unstable economic conditions.”
What are crypto airdrops?
In general terms, crypto airdrops are a medium through which an investor can earn free crypto from a crypto project.
Typically, particular crypto projects have a certain amount of available tokens which can be given to people who meet the eligibility criteria. An investor will have to complete a task to become eligible for these tokens. There are many ways to participate in these crypto airdrops. After finishing the tasks, an investor can claim the tokens or will receive them in their wallet.
What are crypto savings accounts?
Under a crypto savings account, an investor can earn interest on the deposit of their digital tokens to a specific crypto exchange. Unlike how normal banks decide to use customers’ deposits to lend to borrowers, here, the investor decides to opt for depositing their cryptocurrencies while agreeing to lend their tokens to others.
The interest rates that a borrower will pay on the funds borrowed are forwarded to the investor’s account who chose for a crypto savings account. It is said that crypto interest on deposits generally tends to grab high returns compared to the traditional bank savings account.
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(This story has not been checked by Kashmir Bulletin and is auto-generated from other sources)
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