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Author: Admin | 2025-04-28
Realised, these gains are categorised as business income under Indian tax regulations. The taxable amount is computed based on the difference between the conversion rate used to calculate the profit and the rate at which the initial investment was made. This ensures that the profit generated from futures trading is accurately reflected and subject to taxation according to the individual’s income tax slab rate. Conversion to INR When an investor converts their total cryptocurrency holdings (including both principal investment and profits) into Indian Rupees (INR), the tax treatment considers two distinct components: Tax on Principal Amount This is the gain derived from the difference between the conversion rate and the rate at which the principal amount was initially acquired. It is subject to taxation at a rate of 30%, plus applicable surcharges and cess. Tax on Profit Amount Similarly, the gain on the profit amount is determined by the difference between the conversion rate and the rate at which the profit was realised. This gain is also subject to taxation at the same rate of 30%, plus 4% for health and education cess.Additionally, a 1% Tax Deducted At Source (TDS) will be applied to the transaction value of the USDT you are converting back into INR. Example:Avani buys 1000 USDT @ INR 85 to enter crypto futures trading. She makes a profit of 2000 USDT on the 1000 USDT principal. When realising the profit, the USDT price was INR 86. Later, they convert the entire 3000 USDT (principal + profit) into INR at INR 86.5. The taxation would be as follows:On buying 1000 USDT @ INR 85 – No tax (This is just an investment, not a taxable event)On profit of 2000 USDT: – This would be treated as business income at the value: 2000 * INR 86 = INR 172,000 – This amount is taxable at the applicable income tax slab rate of the individual – This becomes the cost basis for the 2000 USDT profit when it’s converted back to INRWhen 3000 USDT is converted into INR (Principal + Profit): On the first 1000 USDT (principal amount): –
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