Here’s How You Can Save Taxes In Crypto with Pi42

While it is true that blockchain has uncorked the bottle with the genie of financial stability inside, it is also true that some countries remain archaic when it comes to crypto taxes. Take India, for instance, the government has a love-hate relationship with all things crypto. While it embraces the technology, it denounces crypto ownership.

And since no one can stop people’s desire for freedom, authorities have started to come up with ways to deter people from picking it up: high cryptocurrency taxes.

However, it does not have to be that way. INR-margined crypto futures offer one way to save taxes since they are different from standard Virtual Digital Assets (VDAs). This focus on INR-margined crypto futures is how Pi42 helps people save on taxes, and this article is undisputed proof of it.

Diving Into the Tax Infrastructure of India

Just as NFTs and crypto ownership started to become a norm in India, the government stepped in, creating a specific regime for ownership of Virtual Digital Assets. The focus of this regime was to regulate taxation on the ownership of these products, and as a result, the following rules emerged:

• 30% VDA Tax on profits: According to the rules mentioned under Section 115BBH of the Income Tax Act, all profits generated from the transfer of VDAs — including the act of selling crypto, swapping from crypto, or spending crypto — will be taxed at a flat 30% rate, with an additional 4% cess. The Act allows no deductions other than the cost of acquisition. Even if there are losses, they will not be eligible for deduction..

• 1% TDS on Transactions: All VDA transfers exceeding ₹50,000 for businesspersons or traders, and exceeding ₹10,000 for salaried individuals, will be subject to 1% TDS in India. This means that both buyers and sellers must deduct this amount from the transaction value, not just from the profits.

These rules are archaic and have single handedly stymied the growth of the Indian blockchain ecosystem. Thankfully, they are limited to spot trading, since the Government of India considers spot trades as Virtual Digital Assets. But what about futures trading? How is it any different?

Speculating the Crypto Value, and Not Buying the Real Asset

Futures trading is a completely different ball game compared to spot trading. There is no asset ownership in this case, as users do not engage in buying or selling any crypto. The focus of this form of trading is on speculating the future price of an asset through derivatives contracts.

So essentially, these futures derivatives contracts are the subject of investment, and for this:

There is no VDA Classification

India’s tax laws do not classify crypto futures contracts as VDAs due to their non-asset-based nature, treating gains as business profits, and not involving actual asset transactions.

Futures Contracts as Taxed at a Slab Rate

Since they are not considered VDAs, futures contracts are taxed according to the slab rate, much like a conventional business. And considering the new budget, which has created a new tax regime under Section 115BAC, the slab structure has been revised, with ₹12 lakh now being the basic exemption.

Not Subject to any TDS

No VDAs means no TDS. This is the general rule for futures contracts, which means INR-margined futures can be traded without any TDS burden. Even if the transaction value exceeds ₹50,000, there is no requirement to pay extra under TDS provisions.

INR-Margin Futures – The Ultimate Way in India to Save Taxes on Crypto

Crypto futures often require converting INR to Tether, since the trading pairs generally consist of crypto and USDT. This adds another layer of complication, and converting USDT back to INR could also create an additional taxable event.

So how do you solve this quandary? Make INR the star through INR-margin futures, which remove the dependence on USDT. This method introduces multiple benefits.

It Makes Tax Reporting Simpler

Since INR is the currency users directly trade with, conversion tracking is no longer necessary. This helps prevent multiple taxable events. And because INR is the only core currency involved, tax reporting becomes much simpler.

No Stablecoin Related Tax Complication

INR-margin futures offer a simpler, safer alternative for Indian investors interested in the cryptocurrency market, as they eliminate complex layers of conversion and exchange fees, making them a safer option for those looking to engage with the market.

How Pi42 Helps with Crypto Tax Savings in India through INR-Margin Trading?

Pi42 is a new platform offering INR-margined futures trading, offering a simple UI and robust offerings. It is considered the ultimate crypto tax saver, bringing hope to those hesitant about crypto due to tax-related issues. Pi42 features top INR-margined futures contracts for BTC-INR, PAXG-INR, and ETH-INR. Users can engage in trading via smartphone or desktop, with a 75x margin option available for bigger risks.

Multiple Future Contracts Options

The futures contract options available on Pi42 are diverse. Investors won’t find themselves pigeonholed with Bitcoin alone. They can choose between L1, L2, meme coins, and even AI tokens.

This mix gives them ample opportunities and ways to interact with cryptocurrency trading. The tax saving comes from the fact that if a particular type of crypto performs exceptionally well — for example, goes through a parabolic jump within a short period — the INR-margin system will ensure that no tax-related complexities emerge. This means that the regulations will treat those massive earnings as part of a simple business transaction, and not as part of the VDA regime.

Tracking all the Futures Trading as Business Income

When investors file their returns, they can use the INR-margin rationale to track all futures trading as business income. This will place their income under the standard business income tax slab, relieving them of the need to go through the same draconian crypto tax regime.

Conclusion

Because spot trading is still frowned upon in India, investors should find a way to circumvent the standard paradigm and adopt INR-margin futures instead. As India’s first platform to support this form of trading, Pi42 sets the groundwork for all investors who want to focus on the speculative aspect of crypto but do not buy and sell assets directly.

Pi42’s unique interface allows them to trade in INR-margin futures pairs, which are not classified as part of the VDA regime by the Government of India. This way, they can easily save taxes when trading crypto.

To continue with your tax saving journey, visit Pi42 today.

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