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The 30% Crypto Income Tax Proposal and the Impact It Might Have on Smaller Investors

By DailyCoin | DailyCoin | 23 Feb 2022


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There has been a recent government proposal to impose a flat 30% tax on income from crypto as well as other digital assets.

From the taxation perspective, mutual funds and stocks are more attractive. Short-term capital gains from the sale of equity shares or equity-oriented mutual funds are taxed at a flat rate of 15%.

Other long-term capital gains are taxable at the rate of 20%, with indexation benefits as well as short-term capital gain, which is taxable as per the applicable slab rate.

 

The Uncertainty of the Crypto Market

The 2022 budget introduces taxation on crypto. A flat 30% tax on crypto income has been proposed without allowance for deduction of expenses, except for the cost of acquisition. 

Loss from crypto is not allowed to offset other income, and it cannot be carried forward either. Due to the uncertainty of the cryptocurrency market, the possibility of large gains will depend on various unknown factors, which are beyond the knowledge and overall control of investors. 

Earlier this month, Colorado announced that it would start accepting Bitcoin for tax payments by summer.

 

On the Flipside

  • In a similar way to mutual funds, large gains have already been realized by long-term cryptocurrency investors up to this point.

 

Why You Should Care

Such a high tax on earnings will effectively mean that small crypto investors with little money or smaller investment periods might not be able to make meaningful income from cryptocurrencies. 

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DailyCoin
DailyCoin

DailyCoin is a crypto news outlet, with a focus to cover cryptocurrency news, NFTs, stablecoins and helpful articles on Fintech, digital assets, blockchain technology and other related technologies. Visit us: DailyCoin.com


DailyCoin
DailyCoin

DailyCoin is an online media outlet, with a focus to cover news, opinions, trends and helpful articles on Fintech, digital assets, blockchain technology and other related technologies.

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