How revenue tax rule applies in your cryptocurrency positive aspects — Explained

The Reserve Bank of India (RBI) has not but granted authorized tender standing to bitcoin and different cryptocurrencies. But, quick rising cryptocurrency buying and selling platforms in India are sufficient to point the rising variety of Indians investing within the digital tender. When there may be funding, there have to be revenue tax legal responsibility, however because of the lack of clear revenue tax guidelines in regard to bitcoins and different cryptocurrencies, it isn’t advisable to keep away from paying revenue tax on one’s cryptocurrency funding positive aspects.

According to tax and funding specialists, all revenue besides the explicitly exempted revenue is liable to revenue tax. This implies that traders will probably be liable to pay taxes on cryptocurrency investments as effectively. They suggested cryptocurrency traders to pay revenue tax on cryptocurrency revenue by understanding the character of the funding.

Speaking on the revenue tax rule relevant on cryptocurrency revenue Amit Gupta, Co-founder and MD at SAG Infotech mentioned, “As per regular income tax parlance, the taxation on cryptocurrencies should depend on the nature of investment, whether it is held in the form of currency or in the form of assets. Profits from the sale of cryptocurrency can be taxed as business income if traded frequently, or as capital gains if held for investment purposes. However, it needs to be noted that, if considered as business income, then the profit can be taxed as per the applicable income tax slab rates, but if it is held for investment purpose, then taxation can be the same as tax gain in the form of capital gains.”

Elaborating upon the capital acquire tax levied on cryptocurrency revenue, the Managing Director of the SEBI registered revenue tax answer agency went on so as to add, “If taxpayers utilized their investments in between 3 years, then short-term capital gains according to the relevant income tax slabs will be applicable. However, if the redemption happens post-3 years of investment, then it can be treated as long-term capital gain and can be taxed at 20 per cent with indexation benefit.”

Highlighting the authorized angle concerned in cryptocurrency transactions Pankaj Mathpal, Founder & MD at Optima Money Managers mentioned, “Cryptocurrency is not a legal tender in India but it doesn’t mean cryptocurrency transaction is illegal. So, while filing income tax on profit from cryptocurrency investments, one has two options — either prove that your income from cryptocurrency is a business or an asset class income or just choose the safest mode of income from other sources. My advice to the cryptocurrency investors is to go by the safest mode and file cryptocurrency income under income from other sources.”

Subscribe to Mint Newsletters * Enter a sound electronic mail * Thank you for subscribing to our publication.

Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!