A few of our esteemed readers have asked on the status of taxation on cryptocurrencies in India. Keeping them in mind, we are writing an article on the same.
Although regulations governing cryptocurrencies are in the works, we want to emphasise that taxes are a different ball game in the same category. Irrespective of whether one can trade or not with cryptocurrencies, if an investor holds them, they are liable to be taxed.
During the year end, tax season we had written a couple of articles on Cleartax tying up with cryptocurrency exchanges such as Unocoin and Zebpay to help investors figure out how much tax needs to be filed.
We got in touch with Cleartax and asked them if the news was indeed true. The person said, “Till now, the government has not specified any tax specifically for cryptocurrencies. Taxes are still income-based. However, there are two probable slabs that cryptocurrencies fall under. Either it will be 12% (which is for items marked as Goods) or 18% (which is for capital gains).
A similar message was told by Sathvik Vishwanath, the founder of Unocoin when we had spoken to him. On the occasion, he had said, “Income tax is applicable irrespective of whether the activity is regulated or not unless it is explicitly exempted. We have seen our customers paying the income tax when they got the notices recently. As the trial always exist in their bank accounts as well, it is unlikely that our users can evade taxes.”
According to an article by Cleartax, the taxes imposed on cryptocurrencies differ, depending on the way, it is acquired. So far there are the following methods:
- Bitcoin Mining
- Bitcoins held as an investment being transferred in exchange for real currency
- Bitcoins held as stock-in-trade being transferred in exchange for real currency
- Bitcoins being received as consideration on sale of goods and services
We hope this article clarified the doubts our readers have pertaining to cryptocurrencies and taxes. Rest assured, we will keep everyone updated as soon as the regulations come in.
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