Just the thought of paying tax on crypto transactions has generated creative memes in popular Indian digital culture. We get it! It’s not easy. The government’s proposal, which lays down how much crypto tax is to be paid, is enough to give anyone a headache.

This piece is part of CoinDesk’s Tax Week.

Tax season starts on April 1, 2022. Indian Finance Minister Nirmala Sitharaman announced the proposals in her budget speech on Feb 1, declaring cryptocurrencies, non-fungible tokens (NFT) and any other crypto asset are, under a broad definition, “virtual digital assets.” This means crypto-assets and NFTs are subject to a tax on profits, similar to stocks in the equity market.

The date to file taxes for the year 2020-2021 has been extended three times and has now expired. It was last due on March 15, 2022.

For taxes to be filed for the year 2021-2022, April 1, 2022, is when one can technically start the process of calculating or filing returns but the last date for individuals is July 31, 2022. It’s worth noting that this date is often extended by the government.

For individuals and businesses required to undergo tax audit, the last date for filing tax returns for the financial year 2021-2022 is Oct. 31, 2022. The last date for filing tax returns for the financial year 2020-2021 has already passed (Feb. 15, 2022) for the following taxpayers:

The Finance Minister also said that “to provide an opportunity to correct an error, taxpayers can now file an updated return within two years from the relevant assessment year,” framing the move “as an affirmative step towards voluntary compliance.”

Read More: Avoid Crypto Tax Headaches: What You Need to Know if You Bought or Sold Crypto in 2021

This step can also be construed as a signal to crypto investors to disclose gains and pay taxes on them from the last two years.

Tax lawyers say crypto users should pay their taxes from whenever they started making gains on their digital assets, irrespective of which year it was.

“The government can technically haul up a crypto dabbler for not paying taxes on gains from at least up to the last five or six years,” said Rajat Mittal, a tax lawyer.

It is advisable that if there are undeclared gains from the past years they should have been declared in the returns for the period ending March 31, 2022.

The Indian government has set out a number of requirements for taxpayers in the Indian Finance Bill 2022 including:

This 30% tax on profit takes into account a 1% TDS (tax deduction at source) deposited by the facilitator/exchanges/person responsible for paying the consideration on every crypto transaction that can be calculated from July 1, 2022, onwards.

The catch here is that gifts from immediate relatives are exempt but gifts from friends are not.

All of these details must be compiled in an income tax return to be submitted to the income tax department. For all questions regarding taxation on crypto, the government has provided a memorandum explaining the provisions in the finance bill that can be accessed here.

Crypto won’t save you from taxes, but it may eventually make them easier to pay, says futurist Dan Jeffries.

Tax guidance lags innovation. So does tax software. Meanwhile, misconceptions abound. If not careful, investors can end up owing more tax than expected and having to unload crypto to pay the bill

Investors in MicroStrategy, Tesla, Block and Coinbase need to consider how wild price swings will affect results, not only directly but indirectly due to complex tax accounting rules.