The tax laws that the Government announced during the last Budget, as well as the answer by MoS for Finance in the Lok Sabha this last month has created a lot of confusion among the crypto community, and possible newcomers still unsure about investing into Bitcoin and crypto.
While India does not yet have a formal Crypto Bill yet, we are slowly getting more hints of the government’s plans to regulate and tax crypto. The crypto tax rules surely point to that, and we are of the opinion that this is a welcome move.
The rules could definitely see changes in the years to come, but having proper tax rules as well as regulations are the first step to set the base for the growth of crypto in the country.
If you’re a newcomer looking to start your crypto investment this financial year, we would ask you first of all not to have any unnecessary worries about the crypto tax rules or the impending future bill. In fact, the things you need to know and look into about crypto are still pretty much the same.
Here’s a short list to help you out:
1. Spend time to understand the basics of cryptocurrency and tax rules/regulations
The world of crypto can be a bit overwhelming to understand at first, but that doesn’t mean you should proceed into trading or investing without understanding at least the basics. Before investing your hard-earned money into the market, it is always important to do the necessary research. Look into the basics of blockchain technology, understand what Bitcoin is, what problem Bitcoin tries to solve, and how the mining process works.
We recommend starting off with Bitcoin. The more you understand Bitcoin, the more you’ll understand the rest of the cryptocurrencies. You should also look into understanding the prevailing tax rules and regulations in your state or country before investing.
2. Understand the risk factor, and only invest what you can afford to lose
Do keep in mind that investing in anything always comes with a certain degree of risk. By following proper investing tips, the goal would be to minimize risk as much as possible. And most importantly, only invest an amount that you can afford to lose in the market. Although this may seem like common sense, it needs to be said nonetheless. It is really easy to be lured by the quick returns to throw all your retirement money, savings, etc. into the market but this isn’t really advisable.
Also, If your investment is causing you to have restless nights, affecting your health or mood, then you’re definitely investing more than you should.
3. Start small and easy
As a newcomer, it is always advisable to start off with small amounts or with passive investing initially. One of the ways you could do this is with a platform like GoSats, which helps you passively invest into Bitcoin everytime you shop. Alternatively, you could start off with investing in blue chip coins like Bitcoin, which are relatively safer investments. You could average out your investments by investing small amounts on a daily, weekly or monthly basis. Once you understand the basics and the market better, you could continue to allocate more or turn to active investing.
4. Understand the coins, exchanges and platforms you’re investing in
Unfortunately, the crypto world has seen and continues to see its fair share of scams - both in terms of the coins and exchanges/platforms of investment. Do proper research into the coin - read the whitepaper, understand the project and the team behind it. We would suggest sticking to “blue-chip coins” like Bitcoin as much as possible or at the very least allocate a significant portion of your portfolio to Bitcoin.
It is also advisable to look into the exchanges or platforms you are investing with the same scrutiny. After all, it’s your hard-earned money that you are investing!
5. You’re Not Late into Crypto
It is natural to feel the feeling that you may be late into crypto - and that the time to make money through Bitcoin and crypto is long gone. Newcomers often face this issue, and end up chasing high-returns by investing into shady projects. Do understand that the world of Bitcoin and cryptocurrency is still in the nascent stage, is booming and has lots of potential to grow. We are all still early.
We hope this guide helps you navigate and help the market. The world of Bitcoin & crypto can be life-changing and enable you on the road to financial freedom - but do remember to have fun and enjoy the ride.
(Roshan Aslam is Co-Founder & CEO at GoSats-bitcoin stacking app. Views are personal)
