Tax (how?) on earnings from BTC trading on LBC?

[Nam3]

Hi,

I'm a small trader on LBC. I'll give an example here, let's say I sell 1 BTC daily on LBC for 90 thousand, so I'm trading 27 lakhs monthly. I get the payment in INR and I buy BTC in INR as well. As we know, there's no tax on LBC and I don't pay any taxes when I use IMPS to buy BTC from my supplier either.

I don't quite get it. I mean am I suppose to pay tax given that BTC isn't regulated and there's no tax code for that? If I'm not supposed to pay taxes then my question would be; how am I going to justify this trading volume, which would be approx 3 crores at the end of a financial year?

I've tried to reach a tax consultant but this guy had no idea about BTC, so I thought why not seek assistance here  Given above numbers, I would be earning like 8-10% on said trading volume. If tax has to be paid, how much do you think I'll end up paying. I appreciate any input on this.

PS: I'm in the process of getting myself a current account (currently trading using my savings account) and I need to know what category would BTC trading fall into. I need to apply for a TIN number to get myself a current account and tin is only possible once I start a firm by specifying tax code?

[deadley]

Calculate your total annual earning and pay tax for that. That's it.

Doesn't matter how you earned. You are earning from trading, doesn't matter it's BTC or something else.

[Nam3]

Calculate your total annual earning and pay tax for that. That's it.

Doesn't matter how you earned. You are earning from trading, doesn't matter it's BTC or something else.

Makes sense, but do I need a current account or shall I keep trading using my savings bank account? If I'm suppose to get a current account, I need to show a firm/business (TIN number). I'm just not sure how to go about doing this step. How do you guys handle it?

[deadley]

Calculate your total annual earning and pay tax for that. That's it.

Doesn't matter how you earned. You are earning from trading, doesn't matter it's BTC or something else.

Makes sense, but do I need a current account or shall I keep trading using my savings bank account? If I'm suppose to get a current account, I need to show a firm/business (TIN number). I'm just not sure how to go about doing this step. How do you guys handle it?

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

[susila_bai]

Calculate your total annual earning and pay tax for that. That's it.

Doesn't matter how you earned. You are earning from trading, doesn't matter it's BTC or something else.

Makes sense, but do I need a current account or shall I keep trading using my savings bank account? If I'm suppose to get a current account, I need to show a firm/business (TIN number). I'm just not sure how to go about doing this step. How do you guys handle it?

It is not required to open firm/business account you can open individual current account and do the transaction in it, and you can show the transaction under short term profit or else you can show the details just like what you are showing when trading in Equity in share market.

[legendster]

Calculate your total annual earning and pay tax for that. That's it.

Doesn't matter how you earned. You are earning from trading, doesn't matter it's BTC or something else.

Makes sense, but do I need a current account or shall I keep trading using my savings bank account? If I'm suppose to get a current account, I need to show a firm/business (TIN number). I'm just not sure how to go about doing this step. How do you guys handle it?

No need for current account as others have pointed out. I used to operate Krogyan with a savings account. Even used a paypal transcript to document my earnings which is pretty common for freelancers. No need to mention BTC at all, just mention IT consulting as purpose code.

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

And by regular and big he means really regular and really big. All you need is 10k as dormant cash in such current accounts. Pretty similar to standard HDFC/ICICI accounts.

[deadley]

Calculate your total annual earning and pay tax for that. That's it.

Doesn't matter how you earned. You are earning from trading, doesn't matter it's BTC or something else.

Makes sense, but do I need a current account or shall I keep trading using my savings bank account? If I'm suppose to get a current account, I need to show a firm/business (TIN number). I'm just not sure how to go about doing this step. How do you guys handle it?

No need for current account as others have pointed out. I used to operate Krogyan with a savings account. Even used a paypal transcript to document my earnings which is pretty common for freelancers. No need to mention BTC at all, just mention IT consulting as purpose code.

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

And by regular and big he means really regular and really big. All you need is 10k as dormant cash in such current accounts. Pretty similar to standard HDFC/ICICI accounts.

If you don't know there is some limitation in saving account. When bank random check and found so many regular transaction they surely freeze acc and will tell you to open current account.

[Nam3]

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

I'm afraid, that's not the case in current scenario. I've had a word with 'Yes' bank and the guy said that he needs TIN number to open a current account. Moreover; he said that other banks will also require TIN number to open a current account. It's not possible to open it without a TIN number.

It is not required to open firm/business account you can open individual current account and do the transaction in it, and you can show the transaction under short term profit or else you can show the details just like what you are showing when trading in Equity in share market.

Currently, no banks are allowing to open an individual current account. Maybe that's a possibility in the past, but not anymore.

Frankly speaking the laws here are nothing more than a BIG headache. I've been to several tax consultants and most of them had no idea about BTC or what BTC trading is. I can't just say that I'll be trading demat or something, because then I won't be able to show proof of income at the end of year.

I've a feeling I need a tax consultant who know BTC in and out. Depressed 

[deadley]

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

I'm afraid, that's not the case in current scenario. I've had a word with 'Yes' bank and the guy said that he needs TIN number to open a current account. Moreover; he said that other banks will also require TIN number to open a current account. It's not possible to open it without a TIN number.

I have current account without TIN. They just need proprietorship deed, partnership deed or company registration document.
No bank ever asked me for TIN number. Even if you are only service provider then you don't need TIN then you need service tax number.

Every business don't required TIN to run business.

[legendster]

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

I'm afraid, that's not the case in current scenario. I've had a word with 'Yes' bank and the guy said that he needs TIN number to open a current account. Moreover; he said that other banks will also require TIN number to open a current account. It's not possible to open it without a TIN number.

I have current account without TIN. They just need proprietorship deed, partnership deed or company registration document.
No bank ever asked me for TIN number. Even if you are only service provider then you don't need TIN then you need service tax number.

Every business don't required TIN to run business.

I agree, TIN is not a requirement at all. He may have asked you by wrong assumption.

Also @Deadley Bro, my account activity on SBI and AXIS have been really high by normal standards, like 3 - 4 times a day, average turnaround around 10k per week some weeks are less than others. This involved receiving payments for various freelancer services that I do (which you know of) plus personal transactions. Had the SBI since 2004 and Axis since 2010. Havent had my account frozen.

Although I do know if the number of transactions and volumes reach a certain level they will freeze your account but myself being a freelancer since 2009 have never hit that level. And in this time I have been a pretty active trader in between 2012 and 2014.

That is why I said "really high volumes"  - which would be your case.

[deadley]

Most probably you need current account, because otherwise 1 day your bank will freeze your bank acc because of regular big transaction.

you can make proprietorship, and open current account behalf of that. Tin number not necessary to open current acc.

I'm afraid, that's not the case in current scenario. I've had a word with 'Yes' bank and the guy said that he needs TIN number to open a current account. Moreover; he said that other banks will also require TIN number to open a current account. It's not possible to open it without a TIN number.

I have current account without TIN. They just need proprietorship deed, partnership deed or company registration document.
No bank ever asked me for TIN number. Even if you are only service provider then you don't need TIN then you need service tax number.

Every business don't required TIN to run business.

I agree, TIN is not a requirement at all. He may have asked you by wrong assumption.

Also @Deadley Bro, my account activity on SBI and AXIS have been really high by normal standards, like 3 - 4 times a day, average turnaround around 10k per week some weeks are less than others. This involved receiving payments for various freelancer services that I do (which you know of) plus personal transactions. Had the SBI since 2004 and Axis since 2010. Havent had my account frozen.

Although I do know if the number of transactions and volumes reach a certain level they will freeze your account but myself being a freelancer since 2009 have never hit that level. And in this time I have been a pretty active trader in between 2012 and 2014.

That is why I said "really high volumes"  - which would be your case.

He was talking about 27 lakh per month, saving account not for regular transaction of commercial thing. That is why we need current account for that.