• Avinash Shekhar, Founder and CEO at TaxNodes


• 23.05.2023 11:32 am

How is TaxNodes helping in calculating individual crypto tax liability?

Ans- TaxNodes is a powerful platform designed to assist crypto tax users in accurately recording, calculating and filing their tax liability. Its primary objective is to simplify the calculation, evaluation, and filing of crypto taxes accurately, thereby minimising the risks of tax miscalculations. One of the biggest challenges for crypto users is the decentralised nature of transactions, which makes it difficult to collate data from various sources such as blockchains, exchanges and wallets and calculate the net gain or loss position accurately. However, TaxNodes has been designed to address these concerns by simplifying the entire process.

TaxNodes is a platform that seamlessly integrates with India's leading exchanges and wallets while supporting 200 blockchains to enable effortless data synchronisation. This integration allows users to generate consolidated profit and loss (P&L) statements, accurately calculating their total tax liability in strict accordance with the provisions of the Income Tax Act. By automating accounting, computations, and information disclosure, TaxNodes eliminates the need for laborious manual work, ensuring precision and reliability. With TaxNodes, crypto investors can avoid the hassle of tedious data collection and time-consuming tax calculations. The platform offers a user-friendly interface, simplifying navigation and comprehension of tax obligations. By simplifying the process, TaxNodes enables investors to meet regulatory requirements effortlessly and reclaim their valuable time and efforts. 

TaxNodes provides various tax-related services to assist individuals, businesses, and traders in the crypto and Web 3 space. Along with its crypto taxation offering, TaxNodes also provides ITR filing services to help users accurately file their income tax returns in compliance with tax regulations in their respective jurisdictions. Moreover, the platform offers tax advisory services to offer expert guidance and support on various tax-related matters, including tax planning, compliance, and regulations in the crypto and Web 3 space. The platform's team of tax experts works closely with users to understand their unique requirements and provide customized solutions to help them stay compliant with tax regulations.

How can investors optimise their crypto tax returns?

Ans- Investors can optimize their tax liabilities by implementing sound investment strategies. Currently, there are no set-off or carry-forward of losses allowed, so the only way to optimize tax liabilities is through careful investment planning. By making informed investment decisions, investors can ensure that they maximize their gains while minimizing their tax liabilities, ultimately resulting in a more favourable tax return.

What is the current state of crypto taxation in India?

Ans- In 2022 Union budget, Section 115BBH was introduced to levy tax on gains from cryptocurrency transactions. However, losses on cryptocurrencies cannot be offset against gains, and only the cost of acquiring crypto assets from the open market can be deducted from the sale price for the calculation of gains. Also, there is also no clarity on the taxation of specific transactions such as mining and staking.

Moreover, the introduction of Section 194S, which levies TDS at 1% on each purchase transaction has led to an overall adverse impact for cryptocurrency trade in India exchanges. Since its implementation on July 1, 2022, Indian exchanges have seen a significant decline in trading volumes, with most exchanges losing 90% of their trading volumes, according to a study by independent think tank ESYA.

Despite the decline, Indian exchanges have contributed INR 157.9 crores (as of March 20, 2023) to the exchequer through TDS under Section 194S. Thus, the industry remains compliant and will continue to contribute to India's development, despite the unfavourable laws.

How can individuals calculate tax on crypto income from foreign exchanges?

Ans- For Indian tax residents, global income is taxable. Therefore, if an individual has transacted on a foreign crypto exchange and has not paid any tax on the gains earned, those gains will be taxable under Section 115BBH. To calculate the tax liability, the individual must disclose their transactions on foreign exchanges and compute a tax liability of 30% on the total gains earned.

TaxNodes is a platform that provides easy-to-use tools for individuals to simplify the process of calculating taxable income for crypto transactions. By purchasing a suitable plan and signing up, individuals can efficiently determine their tax liability in a few simple steps. It is a convenient solution for Indian tax residents to comply with tax regulations and accurately calculate their tax obligations related to foreign crypto transactions.

With TaxNodes, users can expect 99.4%+ accuracy in tax liability calculations, making crypto taxation more straightforward for retail users in India and beyond. The platform ensures data completeness and integrity by offering near real-time profit/loss computation, portfolio tracking, dashboards, and analysis. By automating these processes, TaxNodes allows investors to precisely calculate and manage their crypto taxes without manual intervention.

How investors can claim TDS deducted while trading securities on the exchanges?

Ans- As per the current guidelines issued by the Income Tax department, centralized exchanges are required to deduct TDS under Section 194S and deposit it by the applicable due date. The TDS deposited will be reflected in Form 26AS and AIS. Once it is reflected, the taxpayer can claim the TDS paid as a reduction from the total tax payable while filing ITRs.

For decentralized exchanges, the onus of deducting and depositing TDS lies with the investors. TDS can be claimed only after it is paid by the due date, TDS returns are filed, and it reflects in Form 26AS/AIS.