Fuzzy future for Crypto tax filing firms
In the 2022 union budget, the government mandated 30 percent income tax on virtual digital assets (VDAs) along with a 1 percent tax deducted at source (TDS) on all transactions above Rs 10,000.
Retail investors who had just started testing the crypto waters were caught unprepared. They scrambled to their chartered accountants (CAs) to find a way to calculate gains across multiple transactions involving the purchase and sales of crypto tokens at different prices at the same time across different exchanges.
Unlike stock exchanges where transactions are in INR, on crypto exchanges investors could use Etherium to buy Bitcoins or Bitcoins to buy Matic. For such transactions, the exchange’s statements only mention ‘-100 Matic’ (when you use Matic to buy another VDA) or ‘+1 Ether’ (when you’ve bought Ether). The CAs are then tasked with converting each transaction into the INR price of the token at that given point of time on a particular exchange.
Spotting a business opportunity in this situation, a bunch of crypto tax compliance start-ups have emerged over the past few months, namely KoinX, TaxCryp, and Binocs, among others. Existing tax filing start-ups like Clear have also launched their crypto tax filing platform. Global crypto tax compliance start-ups like CoinTracker and Bitget too have entered the India market.
Most of them launched their products around three-four months back, differentiating themselves from CAs by offering crypto tax tracking services in real time and at lower price points.
“We have heard of CAs asking for Rs 2 lakh just to compute an individual’s crypto taxes for one year. That's where the beauty of technology comes in. We can offer technology at a marginal cost and provide details within 15 minutes.
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