Getting paid in bitoin - taxes

[boogaloo2]

Hi All,

I'm planning on using bitwage.com to invoice international clients in their currency but get paid 100% in bitcoin. Should I pay taxes on it now or after I convert bitcoin to INR in the future? The website needs a full KYC, so it's not anonymous.

Thanks

[avikz]

Are you providing service to your clients as a company or as a freelancer? If you have a company and you are billing them from it, you must add GST to your invoice which needs to be paid every month.

Now if you are a freelancer, then you will consider this income as a freelance consultant where GST doesn't need to be paid but TDS needs to be paid at the rate of 10% every month regardless of what currency you are earning. You can obviously file your tax return at the end of the financial year and get a huge refund. But TDS at 10% needs to be paid every month on your total invoice amount which will reflect to your 26AS statement.

Since Indian government doesn't have a framework for bitcoin, you will have to calculate your values in INR to understand the tax liability.

Hope this helps!

[boogaloo2]

Thanks for your reply avikz! I have a few more questions if you don't mind...

1. I am a freelancer but normally I'd be liable to register for GST because my income in INR would be more than 20lpa. From what I know, export of services under GST is zero rated but I'll need to furnish proof that I'm receiving money in a foreign currency. In case of getting paid in Bitcoin, that would not be possible since I won't receive anything in my bank account. Would you know anything more about how I can handle this?
2. When paying TDS and income tax, do you think I should pay it based on my invoice amount as opposed to the value of BTC?
3. Also, if I convert BTC to INR in the future, will there be tax issues at that point since I'll be receiving money in my bank account then?
4. RBI has said that bitcoin is not legal tender, so will I be doing something illegal by receiving money as BTC?

Thanks

[avikz]

Thanks for your reply avikz! I have a few more questions if you don't mind...

1. I am a freelancer but normally I'd be liable to register for GST because my income in INR would be more than 20lpa. From what I know, export of services under GST is zero rated but I'll need to furnish proof that I'm receiving money in a foreign currency. In case of getting paid in Bitcoin, that would not be possible since I won't receive anything in my bank account. Would you know anything more about how I can handle this?
2. When paying TDS and income tax, do you think I should pay it based on my invoice amount as opposed to the value of BTC?
3. Also, if I convert BTC to INR in the future, will there be tax issues at that point since I'll be receiving money in my bank account then?
4. RBI has said that bitcoin is not legal tender, so will I be doing something illegal by receiving money as BTC?

Thanks

Ok so let me answer based on my current understanding.  I may be wrong so I would advice you to get in touch with @cryptokanoon twitter handle through DM. It is run by a lawyer who has a very deep understanding about the crypto taxation.

1. Since bitcoin is not a recognized form of currency, you won't be able to show it as a foreign currency. But there is a workaround available,

Find an exchanger service who would provide you paypal in exchange of your bitcoin. Then you can cash out the paypal funds to your bank account. This way you can establish the fact that you are earning in foreign currency.

2. Ideally it should be invoice amount. But I am unsure about it.

3. Probably yes because the value of bitcoin may change from the time you have invoiced. Instead, exchange your bitcoins immediately after receiving it to keep a clear accounting.

4. Probably yes! Your bank can definitely ask you for the source of the funds and if they see any association with cryptos, you may be in trouble. However, if you exchage it through paypal, it might just save you!

Since you are invoicing for more than 20 LPA, I would advice you to get a professional help!

[sardasa]

Thanks for your reply avikz! I have a few more questions if you don't mind...

1. I am a freelancer but normally I'd be liable to register for GST because my income in INR would be more than 20lpa. From what I know, export of services under GST is zero rated but I'll need to furnish proof that I'm receiving money in a foreign currency. In case of getting paid in Bitcoin, that would not be possible since I won't receive anything in my bank account. Would you know anything more about how I can handle this?
2. When paying TDS and income tax, do you think I should pay it based on my invoice amount as opposed to the value of BTC?
3. Also, if I convert BTC to INR in the future, will there be tax issues at that point since I'll be receiving money in my bank account then?
4. RBI has said that bitcoin is not legal tender, so will I be doing something illegal by receiving money as BTC?

Thanks

Can you please let me know which service are you providing that'll fetch you 20 LPA? It's way more than my current salary.

[boogaloo2]

Thanks avikz!

sardasa, I don't want to go off topic or into specifics, but I'm middle aged and have a lot of professional experience in my field which translated into this situation. Hope that answers your question somewhat.

[legendster]

Thanks avikz!

sardasa, I don't want to go off topic or into specifics, but I'm middle aged and have a lot of professional experience in my field which translated into this situation. Hope that answers your question somewhat.

Newbie in account - not newbie in age - lol I hope Sardasa doesn't pick on you anymore lol

But in all honesty, most of us are freelancers here, wouldn't mind knowing the secrets of your 20 LPA so that we may get to boost out income by 1 or 2 LPA as well.  

[TigerMart]

I am a freelancer but normally I'd be liable to register for GST because my income in INR would be more than 20lpa.

Why? Is not the ceiling has now been raised to 40lpa?

https://economictimes.indiatimes.com/small-biz/policy-trends/boost-for-smes-exemption-limit-for-gst-hiked-to-rs-40-lakh-from-rs-20-lakh/articleshow/67471417.cms

https://www.hindustantimes.com/business-news/govt-issues-notification-on-gst-exemption-limit-up-to-rs-40-lakh/story-ZPNABozHboTpWNx6YRDBgM.html

https://www.business-standard.com/article/pti-stories/finmin-notifies-april-1-as-date-for-availing-increased-gst-exemption-limit-composition-scheme-119030701022_1.html

[boogaloo2]

I am a freelancer but normally I'd be liable to register for GST because my income in INR would be more than 20lpa.

Why? Is not the ceiling has now been raised to 40lpa?

https[Suspicious link removed]mption-limit-composition-scheme-119030701022_1.html

That ceiling is apparently only for goods and not services, so it wouldn't be applicable to me. Here's some more information: https://www.moneylife.in/article/9-facts-you-must-know-about-the-new-gst-limit-of-rs40-lakh/56112.html

[JSRAW]

Can you please let me know which service are you providing that'll fetch you 20 LPA? It's way more than my current salary.

20lpa is average amount in my line of work.  If one got experienced and contacts then he-she can earn more than 20 lakh pa. If none of them then one can't even earn 5 lakh. Have experienced both scenarios.

I am full time freelancer and work as a 3d character artist - modeler for 3d games and miniature industry.

One piece of advice stay away from desi clients if one wants respect, work satisfaction  and handsome pay.

@boogaloo2  you have to pay taxes if you are converting your btc into fiat and according to my experience there is no fuss about this in ITD. Traditional tax returns will work like a charm, just pay the taxes. I bought a apartment In
delhi with my BTC money.

[legendster]

20lpa is average amount in my line of work.  If one got experienced and contacts then he-she can earn more than 20 lakh pa. If none of them then one can't even earn 5 lakh. Have experienced both scenarios.
I am full time freelancer and work as a 3d character artist - modeler for 3d games and miniature industry.
One piece of advice stay away from desi clients if one wants respect, work satisfaction  and handsome pay.

How ironic! I am from the same industry and a freelancer as well. Yet I made close to 10lpa at my peak years.
You must really have strong connections .. and a really beast of a render machine.

Returning to the topic at hand. OP should only pay taxes on the invoiced FIAT equivalent of the crypto amount at the time of its creation. Since btc or any crypto is not regulated and not even a legal payment mode yet, you can't pay tax on "capital gains" and neither is it a good or service -unless you are selling the crypto as a broker, in that case, you'd be paying a forex tax - which is treated as just regular business income in India.

[JSRAW]

Yeah I got high end pc but it's not related to rendering at all. If you are 3d character artist or specialized zbrush sculptor then feel free to contact me with your work. Would love to help out fellow bitcoiner.

I have approx 8 years of experience in gaming industry and so far got countless numbers of AAA games credits under my belt. I used to work for steam and Konami.

[legendster]

Yeah I got high end pc but it's not related to rendering at all. If you are 3d character artist or specialized zbrush sculptor then feel free to contact me with your work. Would love to help out fellow bitcoiner.

I have approx 8 years of experience in gaming industry and so far got countless numbers of AAA games credits under my belt. I used to work for steam and Konami.

Getting into games was my ultimate aim and I almost made it. No AAA creds to my name though.
I kinda phased out of the industry to due to personal problems about 2 years ago. I am trying to get back on my feet so yes, you will have a PM in your inbox.