HELP- Investing on BTC and want to know someting

[dking01]

Hello

lets i get salary on 25K in a month and i just withdraw in cash and bought BTC via local trader.  Now In this way what the mode of tax? as i will invest 3 lkhs avg annum and for which my income will be under tax slab.

[anonbit992]

Hello

lets i get salary on 25K in a month and i just withdraw in cash and bought BTC via local trader.  Now In this way what the mode of tax? as i will invest 3 lkhs avg annum and for which my income will be under tax slab.

As per my limited knowledge, Tax on bitcoin in India is still a dark area and it would be better to contact reputed exchanges such as Unocoin or Zebpay. If you know any Chartered Accountants, then you should go ahead and contact them regarding this matter and take necessary steps.

If you just bought bitcoin and haven't sold any to realize profits, then I think you don't need to pay any tax. Your tax slab will be as usual, I don't see any reason for a change.

[zahra4577]

Hello

lets i get salary on 25K in a month and i just withdraw in cash and bought BTC via local trader.  Now In this way what the mode of tax? as i will invest 3 lkhs avg annum and for which my income will be under tax slab.

As per my limited knowledge, Tax on bitcoin in India is still a dark area and it would be better to contact reputed exchanges such as Unocoin or Zebpay. If you know any Chartered Accountants, then you should go ahead and contact them regarding this matter and take necessary steps.

If you just bought bitcoin and haven't sold any to realize profits, then I think you don't need to pay any tax. Your tax slab will be as usual, I don't see any reason for a change.

Yes you should seek some professional advice on this.
I think you are concerned about how to disclose the source of income which you got by selling from bitcoin.
IMO you can show it as selling any digital asset etc but I am no expert neither have I ever sold bitcoin to that amount.

[dking01]

Yes if i will show then i can . but what if i will hide?  anyway they will know abt this? dont think so. i live in a place where i will hardly find any professional so internet is only medium

[dking01]

Also i found this  http://viraltalks.com/best-cryptocurrency-in-the-world-you-should-know/p/ . Can we relay other cryptocurrency other than BTC. ??

[bitcoinisbest]

Tax on bitcoin is as normal as you earn the profit and pay tax. There is no special tax needs to be paid on profit earned from bitcoin. Say you bought total of 3 lakhs and sold at 4 lakhs. So profit is 1 lakh. Now total income other than this is say 3 lakhs rs and you add 1 lakh of this profit earned so now you will have to pay tax on 4 lakh.

Which means 0 - 2.5 lakh is 0% and 2.5 to 4 lakh - its 5 % as per effective April 1 2017.

[dking01]

Ohk if i will not declare  and withdraw via cash . is it legal?

[eaLiTy]

Ohk if i will not declare  and withdraw via cash . is it legal?

If you are keeping your asset in bitcoin then there is no need for you to pay the tax ,in India the status of bitcoin is still not clear and does not come under the tax but since you are transacting using bank to purchase your coins you might need to file in your tax returns. Since you will be using your bank account to withdraw cash you need to declare your earnings.

[lordquanta]

As of now bitcoin is NOT considered as asset in India thus there will be no tax on it. However when you encash those btcs then you need to show the source of that cash/income and if applicable pay the tax.  Transaction in cash are not possible to trace thus Govt is trying to reduce cash transaction. Now its your calls

[S_D]

Don't be a jerk pay your taxes, most probably your income from Bitcoin will be exempted if its not too much.

   Right now the Indian taxation for bitcoin is definitely murky but that does not mean you aren't liable to pay any tax on your profit from Bitcoin. I am expecting DABFI to get officials to push for circular guiding everyone on how we go about the taxation on income from Bitcoin or someone to dispute its taxation in court.

Bitcoin is a software according to laws led by CBDT for now.

   In your case you won't have to pay any tax until you sell your bitcoins. When and at what rate you sell your bitcoins is what will decide how much tax shall be paid by you under which head.

If you trade regularly and make profits:
   Profit will be treated as Income under Profits and Gains from Business or Profession.
More taxes are attracted if Income fall under this head and your income is above 100K INR (Service tax, GST, Education cess, TDS, list goes on)
Better hire an expert if you trade regularly and make a lot. Not many are sure if their income falls under this head.

If you sell you bitcoins within 12 months of purchase:
   Profit will be treated as Income from other sources.

Bitcoin as an asset:
   India Accounting Standard 26 Issued by ICAI - Clearly mention software an an intangible asset in point 5 of scope. Hence profits from bitcoin CAN be classified as Capital gains.

If you sell you bitcoins after 12 months but within 36 months of purchase:
   Bitcoins can be treated as Intangible asset.
Profit will be treated as Income from Capital Gains (Short term).

If you sell you bitcoins after 36 months of purchase:
   Bitcoins can be treated as Intangible asset.
Profit will be treated as Income from Capital Gains (Long term).

This profit will be added to your total taxable income, which then be used to calculate your net tax to be paid.

   On the other hand if you wanna be a jerk and not pay your taxes, make all the deals in cash, leave no evidence behind and hope IT dept doesn't knock at your door and you shall be fine.

   Enough information about Indian Taxation on Bitcoin is available on this forum but its in bits and pieces. I might make a single topic guiding everyone on Bitcoin taxation in India if I feel the need for it.

   ^{Disclaimer: We don't have clear regulations on Bitcoin yet the laws will have to be interpreted in order to fit Bitcoin money into our system and interpretation will be different from person to person. Some interpretation will be more correct than other. I will gladly accept if someone could dispute my above classification by mentioning sections/clauses from IT Act. The court or CBDT will have the final say anyways.}

[zahra4577]

Don't be a jerk pay your taxes, most probably your income from Bitcoin will be exempted if its not too much.

   Right now the Indian taxation for bitcoin is definitely murky but that does not mean you aren't liable to pay any tax on your profit from Bitcoin. I am expecting DABFI to get officials to push for circular guiding everyone on how we go about the taxation on income from Bitcoin or someone to dispute its taxation in court.

Bitcoin is a software according to laws led by CBDT for now.

   In your case you won't have to pay any tax until you sell your bitcoins. When and at what rate you sell your bitcoins is what will decide how much tax shall be paid by you under which head.

If you trade regularly and make profits:
   Profit will be treated as Income under Profits and Gains from Business or Profession.
More taxes are attracted if Income fall under this head and your income is above 100K INR (Service tax, GST, Education cess, TDS, list goes on)
Better hire an expert if you trade regularly and make a lot. Not many are sure if their income falls under this head.

If you sell you bitcoins within 12 months of purchase:
   Profit will be treated as Income from other sources.

Bitcoin as an asset:
   India Accounting Standard 26 Issued by ICAI - Clearly mention software an an intangible asset in point 5 of scope. Hence profits from bitcoin CAN be classified as Capital gains.

If you sell you bitcoins after 12 months but within 36 months of purchase:
   Bitcoins can be treated as Intangible asset.
Profit will be treated as Income from Capital Gains (Short term).

If you sell you bitcoins after 36 months of purchase:
   Bitcoins can be treated as Intangible asset.
Profit will be treated as Income from Capital Gains (Long term).

This profit will be added to your total taxable income, which then be used to calculate your net tax to be paid.

   On the other hand if you wanna be a jerk and not pay your taxes, make all the deals in cash, leave no evidence behind and hope IT dept doesn't knock at your door and you shall be fine.

   Enough information about Indian Taxation on Bitcoin is available on this forum but its in bits and pieces. I might make a single topic guiding everyone on Bitcoin taxation in India if I feel the need for it.

   ^{Disclaimer: We don't have clear regulations on Bitcoin yet the laws will have to be interpreted in order to fit Bitcoin money into our system and interpretation will be different from person to person. Some interpretation will be more correct than other. I will gladly accept if someone could dispute my above classification by mentioning sections/clauses from IT Act. The court or CBDT will have the final say anyways.}

Thank you so much for this comprehensive explanation.
How will we keep track of our bitcoin purchase?It is not possible to remember all our purchase dates particularly if we buy from individuals and in fractions.
Suppose I buy 0.5 btc every 2 month,how will I decide which on I am selling after 12 months and which after 36 months?

[S_D]

Thank you so much for this comprehensive explanation.
How will we keep track of our bitcoin purchase?It is not possible to remember all our purchase dates particularly if we buy from individuals and in fractions.
Suppose I buy 0.5 btc every 2 month,how will I decide which on I am selling after 12 months and which after 36 months?

You accept a method and follow it forever. FIFO or LIFO. Usually FIFO is used.
First in first out. You will have to maintain proof of your transactions or you risk getting crushed by IT reps.

Maintain an excel ledger for your BTC transactions and details/printout in a physical file should be enough if you don't trade in millions.

[bitcoinisbest]

FIFO method will be considered for paying your taxes. You purchased 0.5 say every month  and after 2 months say you sold 0.5 . So the very first you purchased and this one you sold will be compared and the profit/loss shall be considered.

Accordingly rest follows.

[S_D]

FIFO method will be considered for paying your taxes. You purchased 0.5 say every month  and after 2 months say you sold 0.5 . So the very first you purchased and this one you sold will be compared and the profit/loss shall be considered.

Accordingly rest follows.

Income Tax Act 145A Section 43(a)
http://incometaxindia.gov.in/Acts/Finance%20Acts/1998/102120000000009218.htm

...the income chargeable under the head "Profits and gains of business or profession" shall be—

(a)  in accordance with the method of accounting regularly employed by the assessee; and
....

So you should be fine if you follow LIFO, FIFO or even Weighted Avg for calculation of income until do not not change it frequently under PGBP.
However if you claim the income under CG then you shall follow FIFO, I don't remember the section defining this for CG but I am sure I read this somewhere.

[Rude Boy]

Tax on bitcoin is normal, don't need to pay extra tax. And also there is no need to pay tax for income on you earning. Say you bought total of 3 lakhs and sold at 4 lakhs. So profit is 1 lakh. Now total income other than this is say 3 lakhs INR and you add 1 lakh of this profit earned so now you will have to pay tax on 4 lakh.
Which means 0 - 2.5 lakh is 0% and 2.5 to 4 lakh - its 5 % as per effective April 1 2017.
Note:There is also non-tax payable payment mode also available in india but, its bit risk.

[dking01]

THANK YOU R_D FOR DETAILED GUIDE

[lordquanta]

THANK YOU R_D FOR DETAILED GUIDE

Correction, It is 'S_D' and not 'R_D'

[S_D]

THANK YOU R_D FOR DETAILED GUIDE

Correction, It is 'S_D' and not 'R_D'

Haha.. glad I could help. Ping me if you ever get stuck again on taxation issues in bitcoin.

Mean while I need some programmer guy to help me at
https://bitcointalk.org/index.php?topic=1794888.0

[S_D]

Tax on bitcoin is normal, don't need to pay extra tax. And also there is no need to pay tax for income on you earning. Say you bought total of 3 lakhs and sold at 4 lakhs. So profit is 1 lakh. Now total income other than this is say 3 lakhs INR and you add 1 lakh of this profit earned so now you will have to pay tax on 4 lakh.
Which means 0 - 2.5 lakh is 0% and 2.5 to 4 lakh - its 5 % as per effective April 1 2017.
Note:There is also non-tax payable payment mode also available in india but, its bit risk.

+1

THANK YOU R_D FOR DETAILED GUIDE

Correction, It is 'S_D' and not 'R_D'

  Haha.. glad I could help. Ping me if you ever get stuck again on taxation issues in bitcoin.

Mean while I need some programmer guy to help me at
https://bitcointalk.org/index.php?topic=1794888.0

[niisarearning]

Don't be a jerk pay your taxes, most probably your income from Bitcoin will be exempted if its not too much.

   Right now the Indian taxation for bitcoin is definitely murky but that does not mean you aren't liable to pay any tax on your profit from Bitcoin. I am expecting DABFI to get officials to push for circular guiding everyone on how we go about the taxation on income from Bitcoin or someone to dispute its taxation in court.

Bitcoin is a software according to laws led by CBDT for now.

   In your case you won't have to pay any tax until you sell your bitcoins. When and at what rate you sell your bitcoins is what will decide how much tax shall be paid by you under which head.

If you trade regularly and make profits:
   Profit will be treated as Income under Profits and Gains from Business or Profession.
More taxes are attracted if Income fall under this head and your income is above 100K INR (Service tax, GST, Education cess, TDS, list goes on)
Better hire an expert if you trade regularly and make a lot. Not many are sure if their income falls under this head.

If you sell you bitcoins within 12 months of purchase:
   Profit will be treated as Income from other sources.

Bitcoin as an asset:
   India Accounting Standard 26 Issued by ICAI - Clearly mention software an an intangible asset in point 5 of scope. Hence profits from bitcoin CAN be classified as Capital gains.

If you sell you bitcoins after 12 months but within 36 months of purchase:
   Bitcoins can be treated as Intangible asset.
Profit will be treated as Income from Capital Gains (Short term).

If you sell you bitcoins after 36 months of purchase:
   Bitcoins can be treated as Intangible asset.
Profit will be treated as Income from Capital Gains (Long term).

This profit will be added to your total taxable income, which then be used to calculate your net tax to be paid.

   On the other hand if you wanna be a jerk and not pay your taxes, make all the deals in cash, leave no evidence behind and hope IT dept doesn't knock at your door and you shall be fine.

   Enough information about Indian Taxation on Bitcoin is available on this forum but its in bits and pieces. I might make a single topic guiding everyone on Bitcoin taxation in India if I feel the need for it.

   ^{Disclaimer: We don't have clear regulations on Bitcoin yet the laws will have to be interpreted in order to fit Bitcoin money into our system and interpretation will be different from person to person. Some interpretation will be more correct than other. I will gladly accept if someone could dispute my above classification by mentioning sections/clauses from IT Act. The court or CBDT will have the final say anyways.}

It is really worth information and i appreciate your effort to explain the topic . But again here it looks like telling about trade like based on capital investment. How about earnings by giving services and like signatures . where there will not be any inflow only earnings then How it will be calculated