Hey there guys, I am sure most of you remember how the algorithmic-stablecoin project, Tera Luna failed and hence, a new plan was set into motion by the team where they ended up airdropping a new token, Luna 2.0 to all of the existing Luna investor’s to compensate for their losses. Well, indeed it may have helped some investors to cover some minor parts of their losses but it seems this is not the case for Indians.
As most of you may be knowing that the new crypto tax regime started on April 1st of this financial year. Where it was clearly stated that all types of crypto profit will come under the 30% taxation norm. This also included airdrops. Hence, as you may have guessed, Indian investors not only have to pay 30% tax on their Luna 2.0 profits at the time of selling but also on the Luna 2.0 airdrop which they received. Further, it is also clarified in the taxation laws that no previous losses can be shown to offset any future taxation. Hence, in simple words, Indian investors who received the Luna 2.0 airdrop must pay a double tax of 30%. First, 30% for receiving the airdrop and second, 30% at the time of selling Luna 2.0 (if sold in profit).
What do the experts have to say?
Expert tech lawyer, Jay Satya pointed out that:
The wordings in the law are so vague, including the definition of virtual digital asset and the definition of transfer, that it would be open to litigation or challenge by the tax department.
He further added that normally the tax department goes with the option that ensures them or the government the most revenue. Hence, it is a high probability that the IT department would categorise airdrops under the 30% tax bracket. Even the executive director of policy of CoinDCX, Manhar Garegrat believes the same as above.
On the other hand, crypto tax advisory firm Quagmire Consulting’s founder, Anoush Bhasin believes that this could be categorised as a gift rather than an airdrop. Well, it would be still subjected to tax but not under the flat 30% category, as Indian tax laws tax gifts based on the taxpayer’s income (income slab).
That will be all for now folks. Make sure to subscribe to our newsletter to receive weekly updates on all kinds of interesting topics.