Luna 2.0 Airdrop Makes Indian Investors Face Tax Burden

Indian tax authorities will treat the airdrop of Luna 2.0 as a gift and tax accordingly. The collapse of Luna and TerraUSD and the launch of Luna 2.0 have released a wave of tax problems for Indian investors. Although the Terraform Labs team has developed a recovery plan and launched Luna 2.0 to make up for the loss, there are a lot of worries.

Gift Tax on Luna 2.0 Airdrop

In a recent analysis, Bloomberg focused on the tax issues caused by Luna 2.0 airdrop. Since Luna 2.0 is provided free of charge by airdrop, it will be regarded as a gift and will attract applicable tax regulations. The analysis points out that this means that investors will have to disclose the value of Luna 2.0 airdropped and pay the gift tax when declaring tax details.

“They (tax authorities) usually consider the most positive view in order to charge more taxes, although this view may lead to absurd results,” the Bloomberg report quoted Jay sayta, a technology and game lawyer.

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Capital Gains Tax on Profits

This is not the end of the problem. From April 1, 2022, any gains from cryptocurrency transactions will be subject to a unified 30% tax. Investors will have to pay a 30% capital gains tax when selling their Luna 2.0. Since the losses of cryptocurrency transactions are not allowed to be offset with profits, Luna’s losses will not be compensated with Luna 2.0 profits.

“The wording in the law is very vague, including the definition of virtual digital assets and the definition of transfer, which will be challenged by the tax authorities,” sayta added. After losing all the investments in Luna and UST, airdrop brings additional tax obligations, which should be kept in mind.