Despite losses, Indian Terra investors are subject to a 30% tax on the LUNA 2.0 airdrop.
According to Bloomberg News, Indian investors who have partially recovered their losses after losing millions due to Terra’s crash through the LUNA 2.0 airdrop may be required to pay taxes amounting to 30% of the value due to India’s cryptocurrency tax laws. The nation taxes cryptocurrency at a rate of 30% and forbids investors from offsetting gains on one token against losses on another. The crypto tax regime, which went into force in April, mandates a flat-rate tax of 30% on the transfer of a virtual asset. Even if airdrops aren’t mentioned, analysts think they’ll be included. He noted that the option that generates the most income is typically chosen by the tax department. As a result, it might tax the airdrops and treat them as income.
How many Indian investors lost money in the Terra disaster is unknown. Rajagopal Menon, vice president of WazirX, reports that on May 9, more than 160,000 investors held LUNA on Indian exchanges. On May 15, the amount increased by 77% as more people purchased the token in anticipation of LUNA’s comeback. The exchange is unaware of how many investors had TerraUSD, though. Anoush Bhasin, the founder of crypto tax consultancy business Quagmire Consulting, thinks the airdrop would be able to be classified as a gift rather than income, which would lessen the tax burden on holders. The flat 30 per cent rate won’t be applicable in that situation, but it will still be taxable. India levies gift taxes according to the taxpayer’s income bracket or rate. Experts predict that taxes, whether they apply to gifts or income, will be applied in two stages. The token will be subject to gift tax at a flat rate of 30% at the time of airdrop. If the token is sold after its value increases, a further flat rate of 30% will be added to the income received. Currently, if the airdrop is considered income or as a gift, it would be taxed by the Indian government.
Read more: The NFT area is launched to move around $800B over the next 2 years
