You cannot setoff losses made in one crypto against the gains made in another crypto asset.
A major update about the upcoming crypto tax regime was announced on Monday.
During a discussion at Lok Sabha, Minister of Finance (State), Mr. Pankaj Chaudhary revealed that while computing the income from the transfer of Virtual Digital Asset (VDA), no deduction in respect of any expenditure (other than the cost of acquisition) or allowance is allowed.
The infrastructure costs incurred in the mining of VDA will not be treated as the cost of acquisition as same as capital expenditure, which is not allowable as deduction.
All these provisions will fall under section 115BBH of the Income-tax Act 1961, which will be added to the Finance Bill 2022.
The Bill also proposes to define what a VDA is.
Moreover, the loss from the transfer of VDA will not be allowed to be set off against the income arising from the transfer of another VDA. It means that if you made losses in Ethereum, but gains in Bitcoin, you will not be able to set off these losses against the profits.
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