What is Income TAX SCENARIO for Cryptocurrency in India ?

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frici84
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Joined: Mon Nov 20, 2017 10:51 am

Fri Dec 22, 2017 1:52 pm

The major issue faced by the crypto currency investor is to know the tax treatment of investment or dealing in crypto currency, the government of India is still not clarified about their legality aspect and also not about their tax treatment, hence we can do the best tax treatment in terms of present laws.

Crypto currency in India is unregulated but it is not yet illegal. However, the RBI has on occasion cautioned investors of inherent risks. RBI always déclassé that they cannot take crypto currency as a tender currency, and even we are also agree with this statement of RBI because of the volatile nature of crypto currency.

An inter-disciplinary committee set up by the government is examining the framework of virtual currencies.
"That said, even if Crypto currency were illegal, income earned needs to be declared and tax paid,"
says an I-T official. Which means every individual need to pay income tax on the earning of Crypto Currency.
hetu
Posts: 0
Joined: Sat Nov 18, 2017 8:33 pm

Fri Dec 22, 2017 1:55 pm

Lets Understand TAX ON CRYPTOCURRENCY IN INDIA using some example ....

There are two possibility of tax treatment of dealing in crypto currency:

a) HOLDING AS INVESTMNET:

If your holding crypto currency as an investment, i,e the purpose into investments in security and hold till your desired profit arrive.

CASE 1:

If you hold crypto currency for more than 36 month, then, any gain arise will be treated as long term capital gain and a flat rate of 20% tax will be given on above gain.
Now lets us understand by example suppose Mr A purchase 1 Bitoins on 01/04/2017 @ 400000 and after holding it more than 36 months they decide to sell on 01/05/2020 @ 775000, now on the above gain Mr. A will be liable to pay capital gain @20% (Subject to indexation)

CASE 2:

If you hold crypto currency for less than 36 month, then, any gain arise will be treated as Short term capital gain and a flat rate of 30% tax will be given on above gain.
Now lets us understand by example suppose Mr. A purchase 1 Bitoins on 01/04/2017 @ 400000 and after holding it less than 36 months they decide to sell on 01/02/2018 @ 775000, in this case Mr. A hold bit coins less than 36 months, now on the above gain Mr. A will be liable to pay capital gain @30%.

b) Holding as business:

If any Person dealing in bitcoins and doing the business of sale and purchase of crypto currency, then any sale and purchase of crypto currency, would be treated as business income, and tax should be paid according to income tax slab.

HOW TO BIFURCATE THE GAIN IS CAPITAL GAIN OR BUSINESS GAIN?

For bifurcation, Capital gain or Business gain we should see the intention of a person who investing in above securities, if the purpose is to hold the investment then the above gain is capital gain, and if the purpose is to buy or sell the securities then the above gain will be business income.
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