Help : Tax Advice for Crypto Hodlers ?

[thenoblebot]

I have a couple of questions I needed clarity on wrt to tax. Say an individual had bought crypto a long time back (2013-2015 period) and had barely sold any crypto for cash. This would obviously mean substantial sums in todays INR value if converted.

1) a) Is the person required to declare our crypto holdings in the Income Tax returns ?
    b) If answer to a is YES - What if a person has not declared any crypto holdings so far in any of the previous returns ?

2) How do people deal with exchanges doing down/missing records ?

3) Are crypto to crypto transactions taxable ? If so - how ?

Any other general advice that one needs to know for such individuals ? Trying to help a friend.

[erikalui]

Crypto to crypto is not taxable till date nor your need to declare your crypto holdings. You only need to file returns if you have converted the crypto to cash and your bank statement can help you to track these earnings. You need to contact a good CA regarding the previous years who has good knowledge about crypto and taxes.

[thenoblebot]

Crypto to crypto is not taxable till date nor your need to declare your crypto holdings. You only need to file returns if you have converted the crypto to cash and your bank statement can help you to track these earnings. You need to contact a good CA regarding the previous years who has good knowledge about crypto and taxes.

Thanks mate - just the answer I was thinking and hoping. Although there was a circular sent out earlier by the IT dept to all the traders on local exchanges - that doesn't seem consistent with non-declaration of crypto. Iirc that circular had asked for all holdings/addresses/exchanges that a person holds - pretty much a declaration of crypto assets. I hope your logic is right though.

Why do you say to contact a CA regarding earlier years? If crypto to crypto is non-taxable and crypto doesn't need declaration - according to your logic. Coz in that case everything seems to be fine according to law. Are you unsure of your assertions here ? Totally understandable due to the confusion.

[erikalui]

Thanks mate - just the answer I was thinking and hoping. Although there was a circular sent out earlier by the IT dept to all the traders on local exchanges - that doesn't seem consistent with non-declaration of crypto. Iirc that circular had asked for all holdings/addresses/exchanges that a person holds - pretty much a declaration of crypto assets. I hope your logic is right though.

Why do you say to contact a CA regarding earlier years? If crypto to crypto is non-taxable and crypto doesn't need declaration - according to your logic. Coz in that case everything seems to be fine according to law. Are you unsure of your assertions here ? Totally understandable due to the confusion.

I said to contact the CA incase you have converted the crypto to cash as you said this (not sure if you just gave an example though):

Say an individual had bought crypto a long time back (2013-2015 period) and had barely sold any crypto for cash.

If you only have crypto holdings, no need to pay any taxes. You can follow this telegram account to get updates: https://t.me/BitcoinIndia

[thenoblebot]

Great. Thanks - perhaps I should have clarified the person sold some amount earlier (what I meant by "barely") and capital gains was paid on it accordingly at 30%. So that leaves me to conclude

1) Crypto-Crypto trades are not taxable, only Crypto-Fiat is.

2) Crypto Holdings are not needed to be declared in IT returns.

Let me know in case I have misunderstood.

[webtricks]

Great. Thanks - perhaps I should have clarified the person sold some amount earlier (what I meant by "barely") and capital gains was paid on it accordingly at 30%. So that leaves me to conclude

1) Crypto-Crypto trades are not taxable, only Crypto-Fiat is.

2) Crypto Holdings are not needed to be declared in IT returns.

Let me know in case I have misunderstood.

Yes. You understood it correctly.
You need to pay tax only if you convert crypto into INR. You need not pay any tax, nor even has to show anything in ITR if you are holding crypto because value of such holding is fictitious and outside the purview of tax.

Also tax on Capital Gain is not 30% in all cases. It is 20% in case of Long term capital gain and 30% only if you made short term capital gains and have annual income more than 10 lakhs. If income is less than 10 lakhs then tax on Short Term Capital Gain is less than 30%.

[thenoblebot]

Great. Thanks guys - yes I should have clarified the 30% was applicable and not 20% - that part was already clear for me regarding capital gains. Apologies for the confusion.

[Stedsm]

I have a couple of questions I needed clarity on wrt to tax. Say an individual had bought crypto a long time back (2013-2015 period) and had barely sold any crypto for cash. This would obviously mean substantial sums in todays INR value if converted.

I think long-term capital gains tax is needed to be paid here, but better to go for a CA who supports BTC transactions and can help out openly in such matters. If you need assistance, I know someone who can be of help.

1) a) Is the person required to declare our crypto holdings in the Income Tax returns ?

Can't really say much over this as the current environment is still too hot in terms of cryptocurrencies in India, I'd hardly suggest you to do that until a regulation is passed here. Instead, go for "income from other sources" issue where you can show anything like these transactions (but not in a way that it's anywhere related to crypto).

   b) If answer to a is YES - What if a person has not declared any crypto holdings so far in any of the previous returns ?

You can give them a simple answer - As there was no such rule on how to declare such holdings, everyone was fearing to show such transactions in their sheet and so you also didn't show them up.

2) How do people deal with exchanges doing down/missing records ?

No worries, make an Excel sheet.
Whenever you carry out a transaction, you just need to keep the record yourself in that sheet (make it like a P/L statement) and take a screenshot of that trade wherever occurred.

3) Are crypto to crypto transactions taxable ? If so - how ?

If they ever become taxable, I'll be the first to leave this crypto space. How and on what basis do you think that these Govs would ever tax crypto to crypto transactions? It's fiat they need to take care about, nothing else.

Any other general advice that one needs to know for such individuals ? Trying to help a friend.

As said, I'd rather go to an experienced personnel rather than going on forum's opinions, that's because someone you can find locally who is experienced as well as a CA too can be greatly helpful in such matters instead of discussing it here as you maybe getting biased opinions on this and you just can't do it like voting system which will decide whom you should go with.

[thenoblebot]

I think long-term capital gains tax is needed to be paid here, but better to go for a CA who supports BTC transactions and can help out openly in such matters. If you need assistance, I know someone who can be of help.

Thanks, will let you know if the need be.

Can't really say much over this as the current environment is still too hot in terms of cryptocurrencies in India, I'd hardly suggest you to do that until a regulation is passed here. Instead, go for "income from other sources" issue where you can show anything like these transactions (but not in a way that it's anywhere related to crypto).

Makes sense - I was primarily worried about this because I believe the IT department had sent out notices to traders in the country asking them to list details like addresses, exchanges, etc - about a year back.

You can give them a simple answer - As there was no such rule on how to declare such holdings, everyone was fearing to show such transactions in their sheet and so you also didn't show them up.

Seems like the logical thing to do. Hopefully they don't end up harassing people.

No worries, make an Excel sheet.
Whenever you carry out a transaction, you just need to keep the record yourself in that sheet (make it like a P/L statement) and take a screenshot of that trade wherever occurred.

Easier said than done. Some of the exchanges have gone down completely and even funds have disappeared, forget records ! So how does one even deal with such missing records ? Yea but I get the larger point, keep records of trades from here on. Can be very cumbersome though.

If they ever become taxable, I'll be the first to leave this crypto space. How and on what basis do you think that these Govs would ever tax crypto to crypto transactions? It's fiat they need to take care about, nothing else.

I hope that is the case, some people say its not taxable and have heard some others say that it depends on the INR rates of the trade. I'd like to believe that crypto-crypto is non-taxable in our country.

As said, I'd rather go to an experienced personnel rather than going on forum's opinions, that's because someone you can find locally who is experienced as well as a CA too can be greatly helpful in such matters instead of discussing it here as you maybe getting biased opinions on this and you just can't do it like voting system which will decide whom you should go with.

Honestly its difficult to find someone "knowledgeable" and "unbiased" coz until the Govt clears the stand its probably one opinion over another.

[playboy654]

Thanks for all the above answers.

What if the crypto acquired through some service like crypto games etc? Will it be 30% ? In this case the investement is barely around $1k and profit is around $100k.

I am not good at calculating these taxes but as long as you are keeping it as crypto then it is not taxable.

When you are converting it into fiat cash then pay income tax according to that.Might be some auditior can help this to solve.