Comprehensive Guide To Paying Taxes On Cryptocurrency Online

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Cryptocurrencies are the popular digital currencies used to purchase products and services. In the beginning, crypto was aggressive because of its decentralized nature. It means no intermediary like a bank, central authorities, or financial institutions are involved in its operation. 

Currently, there are over a thousand digital currencies like BTC, Litecoin, ETH, Ripple, Dogecoin, and more. The investor needs to pay tax on crypto in india when earning profit from the sale of digital assets. 

The Indian government has not legalized digital currency, which is taxable. The Reserve Bank of India restricted the banking facility at the virtual exchange in 2018 in an attempt to ban it. 

The Supreme Court rejects the ban according to the constitutional grounds and the fundamental rights of digital exchanges. There has been no clarification of the tax implications of crypto transactions from the income tax department. 

Tips for filing tax on crypto online 

Are you wondering how to pay taxes on cryptocurrency? Here, you can get simple tips to pay crypto taxes online. Nowadays, many people pay crypto taxes online due to its flexibility. 

  • First, you can visit the official portal of the income tax department. 
  • Sign in with the PAN and click on the e-file section 
  • Add income sources to fill ITR 
  • Calculate payable taxes
  • Use aadhar OTP to finish the verification process 
  • Hit the e-Pay taxes option to pay crypto tax online

Guidelines to reduce the Cryptocurrencies tax liability

Are you seeking a way to reduce the Cryptocurrency tax liability? If yes, there are many methods to reduce the crypto taxes liability. Some strategies are also used for other investments such as stocks and more. Let’s see some methods every investor must know: 

    • To maximize long-term gains tax rates, you should purchase and hold stocks. Tax rates for long-term investments are lower than those for short-term gains. By holding onto their Cryptocurrencies for twelve months instead of selling them within a year, you can pay less tax on Cryptocurrencies.
    • According to the IRS, tax-deductible donations of digital assets are deductible as property donations and are not subject to capital gains taxes. The value of crypto is now worth more than thirty-five thousand dollars when you purchased it for more than ten thousand dollars a year ago. Donating the money allows you to avoid paying taxes on Cryptocurrency.
    • The gains made on other investments are used to offset digital currency losses. Using tax losses to reduce crypto taxes on other kinds of investments effectively minimizes crypto tax liabilities. Many traders are now utilizing tax-loss harvesting to generate non-investment income. It is impossible to reduce an investor’s liability when they lose against their capital gains.
  • The most tax-efficient way to buy crypto is to put it in an IRA, which does not have annual taxes on transactions. As a result, you can enjoy tax-free crypto investments. 

Conclusion 

With effective strategies, you can avoid tax on Cryptocurrencies and have a profitable trading experience. The investments in digital currencies have grown regardless of any guidelines from the RBI. According to the account type, the trader might have to pay crypto tax upon payout.