Luna 2.0 Investors Face 30% Tax After Receiving their Airdrop in India

Vinod Dsouza
india luna terra airdrop crypto tax
Source: Pixabay

Terra Luna investors are having a tough time lately navigating the disastrous fall after it slumped to $0 last month. Terra UST and Luna fell 100% in just 3-trading days wiping away all investments in a jiffy. While investors around the world are having a hard time due to the crash, Indian investors face an additional 30% taxation. Luna 2.0 was airdropped to holders last week. Investors in India who received the airdrop might come under the 30% tax bracket.

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Under the crypto law that came into effect on April 1, income from a “transfer” of “virtual digital asset” will be taxed at 30%. However, the newly formed law does not specifically mention how ‘airdrops’ will be taxed in the country. Nonetheless, Meyyappan Nagappan, digital tax at Nishith Desai Associates said to Bloomberg that the airdrop could be taxed.

“There could be a scenario where people have received tokens above INR 50,000 and if its treated as gift, you’ll have to pay taxes on it. But by the time they sell it if the price falls then you’ll actually realize lesser money, and you may actually go more out of pocket in paying taxes than what you recover and that is the worst case scenario for them as Luna 2.0 was actually issued to compensate.”

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Luna 2.0: Indian Investors Face 30% Tax

Source: Pixabay

Anoush Bhasin, the founder of crypto-asset tax advisory firm Quagmire Consulting, said that the airdrop fits into the ‘definition of gifts’. He stated that Indian investors will shell off 30% in taxes via their Luna 2.0 airdrop.

“They normally consider the most aggressive view possible with a view to collecting higher taxes, notwithstanding the fact that such a view may result in absurdity,” said Jay Sayta, technology and gaming lawyer at CoinDCX. There are close to 160,000 investors of Luna on the CoinDCX platform.

The crypto taxation rules have not been kind to investors in India as many feel the laws are draconian. Investors are not allowed to offset their losses like investors are free to do in the stock markets in India.

At press time, Luna 2.0 was trading at $5.34 and is down 2.6% in the 24-hours day trade.