Do i have to pay taxes only when i convert the BTC to INR, or do i have to pay taxes even for holding BTC, if yes, at what rate (since it fluctuates so much)?
My understanding is that you have to pay tax when you get BTC in exchange for goods/services (not buy BTC) or when you sell BTC for a profit. You do not have to pay taxes for holding BTC.
So how do i classify my income from BTC for say a signature campaign. Once i convert to INR, do i club with additional income and be taxed according to my current tax bracket? Also, if i "gift" btc to my spouse or family members who are not earning, will that save me from tax liability? If yes, how does one go about "gifting" something virtual and what kind of proof could i provide? If i am trading btc, then it would be capital gains tax? I assume i will need to provide purchase proof though, but this purchase was done off bitcoin sites way before Indian exchanges came about, what could i do in this case, most of these websites preached anonymity so there is no actual record of the transaction on their website and p2p transaction purchases. I don't think providing a txid to the tax authorities would help!
