Major crypto currencies like Bitcoin and Ethereum are trading mixed at present. The market cap globally is $1.45 trillion.
As on 30th June, according to Binance, a cryptocurrency exchange, the sterling withdrawals from this platform were reactivated. The users could buy the digital coins with credit and debit cards.
The customers of Binance were unable to withdraw or deposit sterling from the platform on 29th June.
Income Tax Implications on Cryptocurrencies Gains
The profits from the sale of crypto currencies are taxed as business income if frequently traded. If this is held for investment purposes, these are taxed as capital gains. Those who earn more than 50 lakh need to disclose their holdings.
The lockdown and the ongoing pandemic have made the people realize the importance of passive income. There were quite a few who invested in IPO’s and others who started their businesses or invested in real estate. There were many who invested in cryptocurrencies.
According to different reports, in India there was a growth of almost 10 million crypto investors.
It has been observed that the dissatisfaction ad hesitation with the culture of cryptocurrency is decreasing at a fast pace. People have learnt to make good opportunities for good returns. Though there is a growth of investors and traders of cryptocurrency in India, people are worried about the taxes involved. They are concerned about the future of cryptocurrency in India.
Tax Implications of Cryptocurrency Trading
The RBI (reserve Bank of India) has not granted any cryptocurrency, including Bitcoin, the legal status in India. At present there are no clear guidelines or rules for taxability of cryptocurrency.
It is advisable not to skip paying taxes on the profits you make from the cryptocurrency sale. All the incomes, except those that are exempted, is liable to tax. This means the investors have to pay taxes on the investments of cryptocurrencies.
Investment Type
It is important that the cryptocurrency tax depends on the type of investment. This depends if it is held in the form of assets or currency.
If frequently traded, the profits made from the cryptocurrency sale can be taxed as ‘business’ income. This can be taxed as the applicable rate of the slab, and in case of the investment purpose, the taxation is similar to the tax applicable to capital gains.
In case of redemption, after 3 years, this is to be treated as capital gain on long term basis and is taxed at 20 percent.
Experts believe that the profits made from cryptocurrencies can be considered as income from any other source.
Cryptocurrencies Income Disclosure
It is known that any income of more than 50 lakh needs to be disclosed in the Schedule of Assets and Liabilities. As cryptocurrencies are considered to be assets, the taxpayers need to include this in the above schedule.
Besides this, taxpayers who are ordinary residents need to disclose foreign assets and income in the tax returns.
At present, there is no official announcement of the rules and regulations applicable to cryptocurrencies.
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