Written by 10:28 am Cryptocurrency

Gifting cryptocurrency on Diwali? This is how much tax you’ll pay

Diwali is just around the corner and celebrations are underway. It is also the season of gifts. While there are options galore on the market, what if you are thinking of giving cryptocurrency as Diwali gifts this time? Also Read – Google Search introduces a special Diwali 2022 easter egg

Top digital coins such as Bitcoin are all the rage despite their volatile nature. Even the recent collapse in the crypto market couldn’t deter enthusiasts from taking the plunge. Cryptocurrencies are a good investment for many and they can easily be seen as an alternative to cash, letting you buy goods and services online. Gifting cryptocurrencies, thus, makes sense for many, and if you are one of them and reside in India, there are certain rules that you need to know. Also Read – Diwali 2022: Mahindra Scorpio Classic, Mahindra XUV300 and Alturas G4 offered with discounts of up to Rs 2 lakh

Both as a sender and a recipient of the gift, you need to factor in the taxability of the cryptocurrency. While the Reserve Bank of India has time and again shown its disapproval of a crypto-powered market, the high volume of cryptocurrency trading has led the Indian government to consider digital coins. But not without rules. The rule includes a certain tax that the government charges on each transfer of cryptocurrency. Also Read – Flipkart Big Diwali Sale: iPhone 13 available at just Rs 43,090, Nothing Phone (1) at Rs 27,000

According to the guidelines laid out by the Income Tax Department, any sum of money received as a gift attracts tax over it. but there are exemptions. Essentially, gifting money over a certain limit will be taxed. The guidelines also mention that specified movable properties (properties given as gifts by specified relatives),  specified movable properties received at a lower price, and immovable properties received at a reduced price will be considered as a gift. But the taxation on them is not the same.

Since cryptocurrency is under the purview of a moveable asset, per the Union Budget 2022, the government applies the same rule to it. The Union Budget 2022 proposes that any property over Rs 50,000 will be considered for taxation.

Simply put, a cryptocurrency gift that is worth either Rs 50,000 or less will be exempt from taxation, while anything over that limit will be taxable. This is not, however, true for gift vouchers given to employers. If the value of the gift voucher or cash is less than Rs 5,000, it is not taxed, but otherwise, the government levies a tax.

But if the cryptocurrency is coming from a specified relative, such as parents, siblings, children, grandparents, grandchildren, and parents-in-law among others, the virtual digital asset, which may also include digital tokens and non-fungible tokens (NFTs), will not be taxable. If a bride or a groom gifts their spouse a virtual digital asset on the occasion of marriage, the same will also be exempt from taxation.

Any cryptocurrency transfer in India made after April 1, 2022, according to the government, will attract a 30 percent tax, a surcharge, and a 4 percent cess on profits.

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