How bitcoin will be taxed in india and we need to pay for holding also?

[hamaravijay]

Hello!


According to my opinion till now there is no official form of tax regulation is made by the indian government.

But according to CBDT we need to pay taxes like capital gains and Short Term Capital Gain.



I have seen this bitcoin tax calculator.


https://cleartax.in/s/bitcoin-tax-calculator

It is confusing like


If we brought bitcoin 5 lakhs and we sold bitcoin for 10 lakhs and for example fees is 1 lakh( fees is not correct but taken as example)


View this image



Then it shows 4 lakhs

view this image




But we should pay 4 lakhs .......? or any percentage on 4 lakhs


which is mentioned in this article


https://cleartax.in/s/capital-gains-income


But we we pay total 4 lakhs then we may loss know?



And i have another question.


If we hold some amount of bitcoins we need to mention in Income tax returns and if we disclose our bitcoins in income tax returns we need to pay for holding the coins.......? but holding the coins are not profitable as we cannot get profit for holding like shares in the stock market.




But presently there is no proper taxation on bitcoins till now.


I request to clear my doubts thanks!

[manav24]

afaik if you go with capital gain route than as per your txn/calculation it will be 30% on 4lacs profit you made.

so 1.2 lac is the tax needed to be paid, but it will also depends on other variables like how long u held the btc before selling etc.

also there is no tax on holding the coins, tax is applicable only on sales and receipt of INR to your bank account.

[hamaravijay]

afaik if you go with capital gain route than as per your txn/calculation it will be 30% on 4lacs profit you made.

so 1.2 lac is the tax needed to be paid, but it will also depends on other variables like how long u held the btc before selling etc.

also there is no tax on holding the coins, tax is applicable only on sales and receipt of INR to your bank account.

Thanks very much for the response


I have another doubt.



I will get paid for currency as well in crypto from my clients.



Example:

For year 2018-2019 if i got paid through currency if i got paid 10 lakhs and i have paid taxes for it.


For year 2019-2019 if my client paid through crypto for example 10 lakhs for example 2 bitcoins. at the date 4/22/2020 time 12 pm.



According to me i will pay the tax for 10 lakhs for 2019-2020 and also i pay the tax for long term capital gains or short term capital gains when i sold the crypto.


But my question is while filing income tax for the service i paid 10 lakhs the currency rate is picked (4/22/2020 time 12 pm.) or the currency rate will be picked at the timing and date when i file the tax.....?


Thanks!

[akram143]

But my question is while filing income tax for the service i paid 10 lakhs the currency rate is picked (4/22/2020 time 12 pm.) or the currency rate will be picked at the timing and date when i file the tax.....?


Thanks!

AFAIK, you have to pay taxes for the price at the time of your conversion into your bank account, so no matter when you received crypto or file taxes will be taken into account.

[manav24]

But my question is while filing income tax for the service i paid 10 lakhs the currency rate is picked (4/22/2020 time 12 pm.) or the currency rate will be picked at the timing and date when i file the tax.....?


Thanks!

AFAIK, you have to pay taxes for the price at the time of your conversion into your bank account, so no matter when you received crypto or file taxes will be taken into account.

that is correct, you only pay tax when you got INR in your account, payment through BTC or any other mean that is not the legal currency is not applicable, so when you convert it to INR pay taxes on it.

I understand that you want to file taxes for the service you rendered but the issue is you have not got paid for it in INR and thus you cannot file tax return until you convert btc to INR at whatever rate you get, you are not legally bound to file tax if you did not receive INR, file capital tax whenever you convert them.

[webtricks]

I was contacted by teosanru yesterday and he suggested the idea of improved thread on crypto taxation for the financial year 2019-20.

Currently we have this thread on taxation (written by me) and it will answer your query to some extent: https://bitcointalk.org/index.php?topic=5206607.0. But there are better ways to report your crypto income under Income Tax Act and teosanru will post a new thread on the same very soon.

Once he post the new thread, I will make the necessary amendments in the pinned thread.

afaik if you go with capital gain route than as per your txn/calculation it will be 30% on 4lacs profit you made.

so 1.2 lac is the tax needed to be paid, but it will also depends on other variables like how long u held the btc before selling etc.

That isn't complete information and quite misleading. Please wait for new thread for updated information.

[avikz]

Clear tax has made this calculators based on assumptions as there is no official rule is present in India about cryptos. I see they have taken capital gain/loss route which is probably the ideal way because majority of the crypto users are HODLers. However, if someone is earning bitcoin through freelancing work, the calculation will change. Like, I earn from signature campaign and few more affiliate incomes and content writing incomes, so the capital gain rules is actually bad for me. We can disclose this income under 44ADA of tax rules. It is specifically designed for the freelancers and especially helpful if the income is less than 40 lakhs every years.

Do a little research on it and you will see the benefits around it. Also don't show any income on your crypto holding until and unless you are converting them to INR. There is not tax regulations made in India to hold cryptos. So doesn't matter how many bitcoins you hold, show only how much you have converted.

[hamaravijay]

Clear tax has made this calculators based on assumptions as there is no official rule is present in India about cryptos. I see they have taken capital gain/loss route which is probably the ideal way because majority of the crypto users are HODLers. However, if someone is earning bitcoin through freelancing work, the calculation will change. Like, I earn from signature campaign and few more affiliate incomes and content writing incomes, so the capital gain rules is actually bad for me. We can disclose this income under 44ADA of tax rules. It is specifically designed for the freelancers and especially helpful if the income is less than 40 lakhs every years.

Do a little research on it and you will see the benefits around it. Also don't show any income on your crypto holding until and unless you are converting them to INR. There is not tax regulations made in India to hold cryptos. So doesn't matter how many bitcoins you hold, show only how much you have converted.

Thanks for  your precious response i have doubt.


If the income tax raids if i wont show the crypto earnings which paid for my freelance work does they ask why you have not showed......? 

Thanks!

[akram143]

Thanks for  your precious response i have doubt.


If the income tax raids if i wont show the crypto earnings which paid for my freelance work does they ask why you have not showed......? 

Thanks!

No one knows until you hold your bitcoin in your wallet, so they are not going to ask any question.

And more over income tax officials in India rarely ride any individual who cheated in lakhs, they only aim for few hundred crores so don't worry.

[madhavsinghrajput]

Clear tax has made this calculators based on assumptions as there is no official rule is present in India about cryptos. I see they have taken capital gain/loss route which is probably the ideal way because majority of the crypto users are HODLers. However, if someone is earning bitcoin through freelancing work, the calculation will change. Like, I earn from signature campaign and few more affiliate incomes and content writing incomes, so the capital gain rules is actually bad for me. We can disclose this income under 44ADA of tax rules. It is specifically designed for the freelancers and especially helpful if the income is less than 40 lakhs every years.

Do a little research on it and you will see the benefits around it. Also don't show any income on your crypto holding until and unless you are converting them to INR. There is not tax regulations made in India to hold cryptos. So doesn't matter how many bitcoins you hold, show only how much you have converted.

Exactly.Right now you can divide bitcoin earning into four steps and accordingly tax will applied
case1:- Bitcoin through mining.
If person is earning bitcoin through Mining than he/she is self generating bitcoin.Soo the cost of accusation of bitcoin cannot be determine hence no capital gains will be applied as right now there no such provision.
case2:-If bitcoin is held as an investment being transferred in exchange for real currency.
In this case the profit is consider as short term gain or long term gain and tax are applied accoringly.
case3:-Bitcoins held as stock-in-trade being transferred in exchange for real currency
In this case return from the trading of bitcoin will be consider as your business return  and tax will be applied accordingly.
case4:- Bitcoins being received as consideration on sale of goods and services
In this case income will be consider in pressumptive scheme of taxation.
for further detail information you can read this article
https://cleartax.in/s/bitcoins-taxes-india

[avikz]

Clear tax has made this calculators based on assumptions as there is no official rule is present in India about cryptos. I see they have taken capital gain/loss route which is probably the ideal way because majority of the crypto users are HODLers. However, if someone is earning bitcoin through freelancing work, the calculation will change. Like, I earn from signature campaign and few more affiliate incomes and content writing incomes, so the capital gain rules is actually bad for me. We can disclose this income under 44ADA of tax rules. It is specifically designed for the freelancers and especially helpful if the income is less than 40 lakhs every years.

Do a little research on it and you will see the benefits around it. Also don't show any income on your crypto holding until and unless you are converting them to INR. There is not tax regulations made in India to hold cryptos. So doesn't matter how many bitcoins you hold, show only how much you have converted.

Thanks for  your precious response i have doubt.


If the income tax raids if i wont show the crypto earnings which paid for my freelance work does they ask why you have not showed......? 

Thanks!

Lol! You are thinking way too far. Income tax doesn't raid small people like us. But yes, if you are holding few millions worth of bitcoin, you can expect ED to knock at your door. However, if you have shown your bitcoin earnings in your tax return file and if in any case you receive a scrutiny letter from Income Tax department, you are good. If you haven't shown that income, there is a chance of judiciary actions against you. So it's always better to show that amount which you have converted to INR throughout the financial year. It's always better to be safe than sorry.

[hamaravijay]

I was contacted by teosanru yesterday and he suggested the idea of improved thread on crypto taxation for the financial year 2019-20.

Currently we have this thread on taxation (written by me) and it will answer your query to some extent: https://bitcointalk.org/index.php?topic=5206607.0. But there are better ways to report your crypto income under Income Tax Act and teosanru will post a new thread on the same very soon.

Once he post the new thread, I will make the necessary amendments in the pinned thread.

afaik if you go with capital gain route than as per your txn/calculation it will be 30% on 4lacs profit you made.

so 1.2 lac is the tax needed to be paid, but it will also depends on other variables like how long u held the btc before selling etc.

That isn't complete information and quite misleading. Please wait for new thread for updated information.

Good article https://bitcointalk.org/index.php?topic=5206607.0 i have doubts can i pm you Thanks!

[webtricks]

~~snip

Good article https://bitcointalk.org/index.php?topic=5206607.0 i have doubts can i pm you Thanks!

PM replied. I have also answered your question in other thread.