Profit/Loss from the transfer of Ethereum
The tax you need to pay*
Ethereum is the second most popular cryptocurrency, after Bitcoin. Like all other cryptocurrencies, ethereum also works based on blockchain technology.
A blockchain is a digitally decentralised, shared public ledger where all transactions are verified and recorded. All the network participants hold an identical copy of this ledger, letting them see all past transactions. Also, once entered, the transactions cannot be changed or tampered. To edit the erroneous transaction, you need to add a new transaction to reverse it, and both transactions are then visible.
Ethereum is said to be much more than a medium of exchange or a store of value. The unique thing about Ethereum is that the decentralised Ethereum network makes it possible for the users to create applications and ‘run’ them on the blockchain network, similar to how the software ‘runs’ on a computer. These applications allow users to store and transfer personal data or handle complex financial transactions.
The Ethereum network can also perform computations as part of the mining process. Further, users can perform smart contracts (automatically executed contracts) on the Ethereum blockchain system. Once the contract conditions are executed or met, the Ethereum system self-executes and delivers Ether to the appropriate party.
Under the Ethereum blockchain network, you can hold ‘Ether’ as an investment or store of value or use it as a digital currency in financial transactions.
In Budget 2022, the Finance Minister has introduced the provision for taxing cryptocurrency. Taxpayers have to pay tax on profits made from the cryptocurrency transfer. So, an Ethereum tax calculator is a utility tool that calculates the tax liability arising on the transfer of ethereum as per the new income tax provisions introduced by the government.
The ClearTax Ethereum Tax Calculator calculates the amount of tax payable on the profits arising on the transfer of Ethereum. To calculate the same:-
The ClearTax Ethereum Tax Calculator will show you the amount of tax you are liable to pay on such a transaction.
Tax on crypto income is to be paid at a 30% flat rate. The taxable amount of ETH transaction gains can be calculated by reducing the cost of acquisition, i.e. the purchase cost, from the consideration amount received. No other deductions are allowed. For example, we cannot take deductions for any transaction cost incurred or charges paid to the crypto exchanges. You can deduct only the cost of acquisition.
If you have incurred loss while transferring crypto assets like ETH instead of profit, you are again in an unfavourable position. You cannot use that loss to set off against any other type of income like from the business income or any salary income or house property income, etc. And such loss is not allowed for carry-forward to be set off against crypto income in future years.
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