Due to its persistent amplified prices, cryptocurrency took the world by storm, and it grabbed the people’s attention; even in India, people became covetous. The first digital currency which frequently appears in our mind is Bitcoin. Currently, the value of a single Bitcoin is over $47,000; therein, the statement narrates an anecdote by itself. Dogecoin and Ethereum are some major digital currencies as well.
One thing is stable Virtual digital assets (VDAs) keep on fickling like the stock market. When the well-known entrepreneur Elon Musk stated he would invest in bitcoin, its price saw a sudden escalation. After some time, the prices plummeted due to the government’s policies; however, renowned investors like Mr Warren Buffet and Rakesh Jhunjhunwala denounced this digital currency repeatedly by saying it was a hoax and deception. For the last year, we have witnessed a tussle between the government and VDAs. Finally, the government of India took some cardinal steps to halt its influence, which was inevitable.
New government policies have descended the high spirit of investors who were positive earlier, changes that commenced this fiscal year somehow afflicted the industry. According to new guidelines, 30% tax will be imposed on the income generated by it alongside 1% TDS on the transfer, might be we will see the GST imposition soon. Still, India is not only the country imposing heavy taxes on Crypto. All the major economies are taking steps because no authority wants to lose its grip on the financial system.
Further, we will discuss some points that might guide you on how to avoid financial losses in between these hurdles.
Firstly, Comprehend Crypto-
Before investing your money in anything, you should understand it correctly, especially when considering an investment in any digital currency. Attain adequate knowledge regarding this technology the best thing you can do is consult an expert because investing in Crypto can be perilous for an apprentice. One should not overlook the loophole and challenges associated with it and grasp all aspects of this industry. Once you obtain ample knowledge, it will reduce the level of risk.
Spend a Limited Amount-
Government interference in these digital currencies is inevitable. All prominent experts recommend the same, don’t spend too much money because it can alter anytime, right now the tax limit stands at 30% might be it can be increased up to 50% in the future who knows.
Safe your Holding –
It will help if you keep your digital assets in a hardware wallet which gives it protection. Without a key, an anonymous person will not be able to access it; additionally, make a backup of your password and keep it in a safe place.
Invest for the long term-
If you plan to get an instant return from Crypto, the result will not be suitable for you. You should invest your money for a longer time because the market of Crypto is repleted with uncertainties due to 1% TDS, and 30 % don’t expect an immediate return. If you invest your money for a more extended period, it will benefit you.
Don’t Skip Tax-
Tax is a crucial part of our financial system. You are inviting problems, skipping taxes for virtual digital assets, and deceiving the government by avoiding it. You might be you will save some money. Still, later the consequences can be atrocious for you, so you better pay your taxes correctly.
The government’s interference in Virtual digital assets (VDAs) has raised investors’ concerns. Still, parallelly, it has advanced the anxiety for the government because controlling the financial system is the most crucial power an authority enjoys. Losing it will affect their credibility; India is not a loner; in this case, significant economies take severe measures and agree this is the best time to crack down on cryptocurrency. Besides, these digital currencies are not regulated by any legal body. Indeed, it is a significant loophole VDAs possess right now, creating disaster and instability for any economy. As an investor, it is essential to take your steps smartly; by following the simple measures mentioned above, one can make their investment smoother and tussle free.