Not all crypto earning will be taxed on the 30%

[Bureau]

I was looking for a DEX to make purchase without getting caught by the government. Ultimately it is not possible as every INR to crypto and vice versa will attract tax. I know you can hide it but that won't stay for long.

While trying to find a way i stumbled upon a website called Koinly. After going through every link I found one that suited my requirement. The link was on  Crypto Tax India: Ultimate Guide 2023, as i continued reading it i was able to find that not all crypto earnings needs to be in the 30% tax slab.

I noticed that many of you on this forum have been a participant of signature bounty. I found that you guys might not fall on that slab. The paragraph that says that I am pasting it below.

Code:

However, the 30% tax won’t always apply as sometimes the ITD will view you as having income instead. In these instances, you’ll pay tax at your Individual Tax Rate on receipt. This includes:

Gifting crypto - if you're the recipient of the gift (refer to the gift section for more details).
Mining coins (refer to the mining section for more details).
Getting paid in crypto.
Staking rewards.
Airdrops.

I think we need more clarification on this subject. If anyone here has that knowledge then please do share your expertise.

Thank.

P.S: Please ignore my typo and sentence mistake.

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[webtricks]

The article is indeed correct. After going through several discussions and talking with various experts, I'm finally certain about the language of Section 115BBH. It only deals with the trading income. If you are earning crypto from any other activity, it doesn't come under the ambit of Section 115BBH. However, such other activities give rise to two taxable events. Let's take an example to make it more clear:

One of the items in the table above is 'Getting paid in crypto' which includes campaign payment on the forum. Suppose a participant receives $100 weekly in BTC but doesn't immediately sells it. Finally, he sells his annual income after 50 weeks which should be $5000 in BTC but due to the fluctuation in the prices of BTC, it stands at $7000. It is clear that $5K out of $7K is an earning from the campaign but $2K is the profit from speculation. Hence, $5000 at USDT/INR rate on the date of sale will be taxed as per normal taxable rates whereas $2000 at USDT/INR rate will be taxable at 30% under section 115BBH.

[Lender]

-snip-

$5000 at USDT/INR rate on the date of sale will be taxed as per normal taxable rates whereas $2000 at USDT/INR rate will be taxable at 30% under section 115BBH.

Will 1% TDS be applied on $2000 component only or on the total of $7000?

[webtricks]

-snip-

$5000 at USDT/INR rate on the date of sale will be taxed as per normal taxable rates whereas $2000 at USDT/INR rate will be taxable at 30% under section 115BBH.

Will 1% TDS be applied on $2000 component only or on the total of $7000?

1% TDS will be applicable on the total $7000. This is very important point. I missed it in my post above. When you sell crypto on Exchanges, the whole amount is considered as the transfer. So while showing the amount of consideration u/s 115BBH, you are required to show the whole amount $7000 but you can show $5000 as the cost of acquisition, hence the net amount chargeable to tax u/s 115BBH will be $2000.

[pakhitheboss]

1% TDS will be applicable on the total $7000. This is very important point. I missed it in my post above. When you sell crypto on Exchanges, the whole amount is considered as the transfer. So while showing the amount of consideration u/s 115BBH, you are required to show the whole amount $7000 but you can show $5000 as the cost of acquisition, hence the net amount chargeable to tax u/s 115BBH will be $2000.

Welcome back @webtricks. Looking at the signature that you are wearing I am assuming that we will now here from you more often.

This why it is better to use a local exchange than a P2P service platform as on a  local exchange TDS deduction is done instantly when you do a trade. Whereas if you do not use a local exchange you have to do the math all by yourself.  

Just a reminder: 7 years jail if you do not pay TDS on time

[elevates]

Just went ahead and read the big article. Everything issue has been discussed with an example which was helpful. I also found out that upto INR 50k as a crypto gift would not attract tax in a this financial year. The other thing that I understood is that for filling the form you would need a CA or a tax consultant. The form for me is not personally still not clear. Last date of submission is 31st of July.

[pawanjain]

-snip-

$5000 at USDT/INR rate on the date of sale will be taxed as per normal taxable rates whereas $2000 at USDT/INR rate will be taxable at 30% under section 115BBH.

Will 1% TDS be applied on $2000 component only or on the total of $7000?

1% TDS will be applicable on the total $7000. This is very important point. I missed it in my post above. When you sell crypto on Exchanges, the whole amount is considered as the transfer. So while showing the amount of consideration u/s 115BBH, you are required to show the whole amount $7000 but you can show $5000 as the cost of acquisition, hence the net amount chargeable to tax u/s 115BBH will be $2000.

That clears so many things. I was always under the assumption that EVERY crypto income is taxed under 30% tax slab.
This was very much unfair according to me since traders were taxed only on their profits but the ones who are being paid in crypto were taxed on the whole income.
Now that things are more clear, I think the income from campaigns will be added to our income from our full time jobs in INR.
Together both the income will be taxed under the normal tax slabs if I am not wrong.

[webtricks]

~~

Welcome back @webtricks. Looking at the signature that you are wearing I am assuming that we will now here from you more often.

Haha, thanks for the welcome! Bitcointalk has been always my first love in crypto and indeed it's a pleasure to contribute on the forum and let me assure you that the campaigns aren't something that induce me to be more active on the forum. That's why I always look to join campaigns with no minimum post so I don't just write posts for the sake of reaching minimum condition. 

This why it is better to use a local exchange than a P2P service platform as on a  local exchange TDS deduction is done instantly when you do a trade. Whereas if you do not use a local exchange you have to do the math all by yourself.  

Just a reminder: 7 years jail if you do not pay TDS on time

Good point. It is always better to use the standard mediums and avoid any possibility of compliance mistake. The prominent Indian Exchanges have properly implemented TDS structure and better to use those if the amount isn't big.

Just went ahead and read the big article. Everything issue has been discussed with an example which was helpful. I also found out that upto INR 50k as a crypto gift would not attract tax in a this financial year. The other thing that I understood is that for filling the form you would need a CA or a tax consultant. The form for me is not personally still not clear. Last date of submission is 31st of July.

The ITR form takes into consideration many things. The things like multiple house properties, capital gains and/or business income have implications on the choice of ITR. So like you said, it's always best to consult a CA or a tax consultant before filing the income tax return.

~~
1% TDS will be applicable on the total $7000. This is very important point. I missed it in my post above. When you sell crypto on Exchanges, the whole amount is considered as the transfer. So while showing the amount of consideration u/s 115BBH, you are required to show the whole amount $7000 but you can show $5000 as the cost of acquisition, hence the net amount chargeable to tax u/s 115BBH will be $2000.

That clears so many things. I was always under the assumption that EVERY crypto income is taxed under 30% tax slab.
This was very much unfair according to me since traders were taxed only on their profits but the ones who are being paid in crypto were taxed on the whole income.
Now that things are more clear, I think the income from campaigns will be added to our income from our full time jobs in INR.
Together both the income will be taxed under the normal tax slabs if I am not wrong.

Yes, both incomes will be taxed as per the normal tax slabs but remember, don't directly add the campaign earnings to your salary from the full time job. Both will be shown under separate heads. 

[RajeshKarwa]

Cryptocurrency earnings, including those from signature bounties or other activities, are likely to be subject to taxation in India. The tax treatment may depend on various factors such as the nature of the earnings (capital gains, business income, etc.), the duration of holding the assets, and the individual's tax residency status.

To ensure compliance with tax regulations and to determine your specific tax liability, it is recommended to consult with a qualified tax professional who can provide personalized advice based on your circumstances and the current tax laws in India. They can guide you on the appropriate tax slab, deductions, and any exemptions that may be applicable to your situation.

Thanks !!

[Bureau]

Cryptocurrency earnings, including those from signature bounties or other activities, are likely to be subject to taxation in India. The tax treatment may depend on various factors such as the nature of the earnings (capital gains, business income, etc.), the duration of holding the assets, and the individual's tax residency status.

To ensure compliance with tax regulations and to determine your specific tax liability, it is recommended to consult with a qualified tax professional who can provide personalized advice based on your circumstances and the current tax laws in India. They can guide you on the appropriate tax slab, deductions, and any exemptions that may be applicable to your situation.

Thanks !!

You are correct! Rather going here and there it is better to meet with a CA or a Tax consultant for filing crypto tax. If you cannot then there are websites like Koinly & Taxnode that can help you. They have partnered with multiple national and international exchanges. You need to connect your exchange wallet and the rest they will do it for you. A service charge will be applicable for filing tax.

[elevates]

You are correct! Rather going here and there it is better to meet with a CA or a Tax consultant for filing crypto tax. If you cannot then there are websites like Koinly & Taxnode that can help you. They have partnered with multiple national and international exchanges. You need to connect your exchange wallet and the rest they will do it for you. A service charge will be applicable for filing tax.

I feel that giving these third parties might not be a good idea. You need to understand that they might get compromised in the future. Do remember India does not have any privacy law. As of now the government is least interested about cryptocurrency and the community that is actively using it as an earning.

It will be wise to talk to either a CA or tax consultant. If you cannot do that then use these service but insure you submit a change of wallet address request to those exchanges. As I have not used any of the recommended platforms, there is no way for me to find how they function. Do remember not to give your login credentials or your password. There is a possibility that some rogue employees from these platforms might get access to those. Be careful and never share your details to safeguard yourself.

[Bureau]

You are correct! Rather going here and there it is better to meet with a CA or a Tax consultant for filing crypto tax. If you cannot then there are websites like Koinly & Taxnode that can help you. They have partnered with multiple national and international exchanges. You need to connect your exchange wallet and the rest they will do it for you. A service charge will be applicable for filing tax.

I feel that giving these third parties might not be a good idea. You need to understand that they might get compromised in the future. Do remember India does not have any privacy law. As of now the government is least interested about cryptocurrency and the community that is actively using it as an earning.

It will be wise to talk to either a CA or tax consultant. If you cannot do that then use these service but insure you submit a change of wallet address request to those exchanges. As I have not used any of the recommended platforms, there is no way for me to find how they function. Do remember not to give your login credentials or your password. There is a possibility that some rogue employees from these platforms might get access to those. Be careful and never share your details to safeguard yourself.

You are also correct that it is wise to talk to a professional rather than to use an app or website. The reason why some might choose an app over a professional is because of the service fees. Many Indians are using these apps to earn and spend their earnings on themselves or their families. They might not be able to afford the repeated fees of hiring a CA or somebody else.

I understand they will use a third-party app. I also understand that the exchanges providing these services are approved by the government. I do not think that they would manipulate or scam those who desperately need their assistance.

[avikz]

I do indeed have a question here as I am hearing a little difference in opinions. Can signature campaign income be considered as a trading activity or can we consider it as a mode of getting paid and can be added as normal income?

Also if we convert the cryptos in INR which I have received from signature campaign, will it be considered as a trading activity? A lot of unknowns are here. I spoke to couple of CAs and they are all generalising all crypto incomes under 30% bracket.

[pakhitheboss]

I do indeed have a question here as I am hearing a little difference in opinions. Can signature campaign income be considered as a trading activity or can we consider it as a mode of getting paid and can be added as normal income?

Also if we convert the cryptos in INR which I have received from signature campaign, will it be considered as a trading activity? A lot of unknowns are here. I spoke to couple of CAs and they are all generalising all crypto incomes under 30% bracket.

For the financial year 2022-23 and assessment year 2023-24, you will need to declare your cryptocurrency taxes using any of these two forms.

1. ITR-2
2. ITR-3

As per my understanding ITR-2 form should be used to report capital gains. Basically Earning from trading, holding and then selling.

The ITR-3 form is for reporting taxes from business income. As per my understanding this is the form that you need to show your earning from Signature campaign or Bounty campaign. Do remember if you had waited for the price of your earning to increase and then you sold it. It will fall under captial gain.

First use these platforms like Koinly or Taxnode to determine whether your earning falls under capital gain. Then contact a financial advisor for further clarification on how to declare your income.

The best time to declare your income is after 25th of June and before 25th of July. The last date of submission is 31st of July this year.

[elevates]

For the financial year 2022-23 and assessment year 2023-24, you will need to declare your cryptocurrency taxes using any of these two forms.

1. ITR-2
2. ITR-3

As per my understanding ITR-2 form should be used to report capital gains. Basically Earning from trading, holding and then selling.

The ITR-3 form is for reporting taxes from business income. As per my understanding this is the form that you need to show your earning from Signature campaign or Bounty campaign. Do remember if you had waited for the price of your earning to increase and then you sold it. It will fall under captial gain.

First use these platforms like Koinly or Taxnode to determine whether your earning falls under capital gain. Then contact a financial advisor for further clarification on how to declare your income.

The best time to declare your income is after 25th of June and before 25th of July. The last date of submission is 31st of July this year.

Very detailed and clear explanation! I did verify the information on clear tax and it is correct what @pakhitheboss wrote. Another important information I would like to add to this reply. If anyone is planning to directly visit a CA then it might be a bad idea at first as they might not be able to differentiate with raw data whether you fall under Captain gain or business income. Please use those platforms that can directly access your exchange wallet and give you the correct figure. There might be many who might have not paide 1% TDS on international exchange. Those platforms are able to calculate that amount too.

[pakhitheboss]

For the financial year 2022-23 and assessment year 2023-24, you will need to declare your cryptocurrency taxes using any of these two forms.

1. ITR-2
2. ITR-3

As per my understanding ITR-2 form should be used to report capital gains. Basically Earning from trading, holding and then selling.

The ITR-3 form is for reporting taxes from business income. As per my understanding this is the form that you need to show your earning from Signature campaign or Bounty campaign. Do remember if you had waited for the price of your earning to increase and then you sold it. It will fall under captial gain.

First use these platforms like Koinly or Taxnode to determine whether your earning falls under capital gain. Then contact a financial advisor for further clarification on how to declare your income.

The best time to declare your income is after 25th of June and before 25th of July. The last date of submission is 31st of July this year.

Very detailed and clear explanation! I did verify the information on clear tax and it is correct what @pakhitheboss wrote. Another important information I would like to add to this reply. If anyone is planning to directly visit a CA then it might be a bad idea at first as they might not be able to differentiate with raw data whether you fall under Captain gain or business income. Please use those platforms that can directly access your exchange wallet and give you the correct figure. There might be many who might have not paide 1% TDS on international exchange. Those platforms are able to calculate that amount too.

You are correct, if you visit a CA with raw data, he/she will ask you to pay flat 30% tax. Whereas according to cleartax not all earnings fall under the bracket.



@avikz you can check with a CA or tax consultant under which category signature campaign earnings will fall.