The LUNA 2.0 airdrop exposed investors to tax burdens in India and the authorities will treat the airdrop as a gift tax so let’s read more in today’s altcoin news.
The crash of LUNA and TerraUSD, as well as the launch of Luna 2.0, launched a wave of taxation issues for investors in India, and while the Terraform Labs team worked on a recovery plan and launched it to compensate for the losses, the concerns of are only piling up. In a recent analysis, Bloomberg focused on the taxation issues that the Luna 2.0 airdrop exposed.
Since Luan 2.0 was provided free of cost as an airdrop, it will be treated as a gift and will attract tax provisions. It means that at the time of filing tax details, the investors will have to disclose the value of the airdropped token and pay up the gift tax as the analysis noted. Bloomberg report quoted Jay Sayta, a gaming lawyer staying:
“They [tax authorities] 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.”
The problem didn’t stop here and any gains ont the transactions are to be taxed at a flat 30% with effect from April 1, 2022. the investors will pay a 30% capital gains tax when they will sell LUNA 2.0 so with losses on transactions not being allowed to be offset against profits, the losses on LUNA won’t be compensated with the profits from Luna 2.0, Sayta added:
“The wordings in the law are so vague, including the definition of virtual digital asset and the definition of transfer, that it would be open to litigation of challenge by the tax department.”
After losing the investments in UST and LUNA, the airdrop brings more tax obligations to keep in mind.
As recently reported, The Senior analyst at Arcane Research Anders Helseth filed an entry recently claiming that Terraform Labs whales dumped LUNA tokens on retail users shortly before the collapse and during the collapse of the UST stablecoin. If the Terra ecosystem is sinking cruise ship, the captain and the guests fled and left most passengers without a lifeboat, reads the post. Helseth tracks down the flaws of the TErra Classic Protocol back to the genesis claiming that “no block rewards and highly concentrated LUNA supply gave power to the early holders.
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