Consequences of skipping 30% capital gains tax!

[Bitcoin Smith]

I just came across many interesting threads in reddit subforum where Indians are saying that IT won't give any penalty charges even for someone who pays zero rupees as tax, which is entirely incorrect.

Usually IT department works at the slowest pace and we will get notices for missed tax payment after 3-5 years only unless the amount involved in other criminal activity and the tax need to be paid over 50L or so. Few CA said people received notices in 2023 for the missed payment of the financial year 2018-2019, so no matter what never skip tax payments if you have made transactions over 10L or over in all of your accounts because everything combined under our PAN so it on't be much harder for them to track all our bank records.

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

[Bureau]

I just came across many interesting threads in reddit subforum where Indians are saying that IT won't give any penalty charges even for someone who pays zero rupees as tax, which is entirely incorrect.

Usually IT department works at the slowest pace and we will get notices for missed tax payment after 3-5 years only unless the amount involved in other criminal activity and the tax need to be paid over 50L or so. Few CA said people received notices in 2023 for the missed payment of the financial year 2018-2019, so no matter what never skip tax payments if you have made transactions over 10L or over in all of your accounts because everything combined under our PAN so it on't be much harder for them to track all our bank records.

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

30 percent tax if not paid can lead to harsh penalties and a few years in jail if ignored. Skipping TDS will cause 7 years of jail term and a penalty depending on the amount skipped. The problem is with TDS, as you can show zero capital gain by using stable coins and not trading on Indian exchanges. Not paying TDS and using P2P services will cause issues later on and for that, you would receive a letter from the IT department. Do not think that they will not go after individuals who did transactions that were less than 10 lac in a year. That is a myth as they generally go after accounts that have 10 lac and above transactions first and then later on they go after less-valued accounts.

[erikalui]

They do send out notices to anyone who skips taxes and tackles cases. If one is dealing via Indian exchanges, there is more chances of getting such notices and they can send notices up to 7 years but the amount does matter. The tax has ruined it for everyone as it's hard while filing returns and plus, they demotivate you to deal in bitcoins by imposing 30% which is a huge amount to pay.

[pawanjain]

I just came across many interesting threads in reddit subforum where Indians are saying that IT won't give any penalty charges even for someone who pays zero rupees as tax, which is entirely incorrect.

Usually IT department works at the slowest pace and we will get notices for missed tax payment after 3-5 years only unless the amount involved in other criminal activity and the tax need to be paid over 50L or so. Few CA said people received notices in 2023 for the missed payment of the financial year 2018-2019, so no matter what never skip tax payments if you have made transactions over 10L or over in all of your accounts because everything combined under our PAN so it on't be much harder for them to track all our bank records.

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

So you mean we can evade tax if our transactions are not worth more than 10L in total ? 
I would rather consider not making any transactions in fiat at all for few more years until tax laws on crypto are matured.
Afterall, being a long term holder I am free to keep my holding intact for few more years which gives me ample time to plan before making any fiat/crypto exchanges.

[pakhitheboss]

In 2014, I had received a demand letter from IT. At that time I was trading on local stocks and I did make some profit at that time. The amount they questioned was not so big as it was my initial days of trading.

The letter questioned my funds and demanded a reply. They did ask me to contact them which I was reluctant. I did not respond to the letter and the the finance ministry cancelled such demands which were less than INR10k after a year.

For now the situation is different, the condition and the infrastructure is different. It would be good to pay taxes otherwise the situation can get complicated.

[TheUltraElite]

In 2014, I had received a demand letter from IT. At that time I was trading on local stocks and I did make some profit at that time. The amount they questioned was not so big as it was my initial days of trading.

Taxation from stock market trading is much more streamlined on the website, indeed all these things have become easier to fill in with the development of the Indian government websites. But for crypto such sections need to be filed on our own.

I am hence not selling anything currently, waiting for a better situation to come in future. I understand that this might not be the case with most of my fellow members here.

[avikz]

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

In India, you are legally required to keep a record of all your transactional documents for 7 years. You have rightly said that anyone can receive income tax notice couple of years late. Firstly income tax will send you a demand notice and you are either require to pay that demand or to deny that demand if you have documented proof. If you do not submit your reply even after multiple notices from IT department, they can begin with legal proceedings against you.

But unless you have done something criminal or have not siphoned a huge amount of money, IT department will try not to take legal proceedings against you but will ask for payment of taxes. So my suggestion is to always pay your taxes. Also from next year onwards, start paying advance tax. That one thing will show your good intention to IT department that you want to pay your taxes. So even if anything goes wrong they will try to help you.

Don't bring such thoughts in your mind that IT department cannot do anything. Everything is linked with your PAN and Aadhar. It's not of task for a government department to find out about your finances.

[kentrolla]

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

In India, you are legally required to keep a record of all your transactional documents for 7 years. You have rightly said that anyone can receive income tax notice couple of years late. Firstly income tax will send you a demand notice and you are either require to pay that demand or to deny that demand if you have documented proof. If you do not submit your reply even after multiple notices from IT department, they can begin with legal proceedings against you.

But unless you have done something criminal or have not siphoned a huge amount of money, IT department will try not to take legal proceedings against you but will ask for payment of taxes. So my suggestion is to always pay your taxes. Also from next year onwards, start paying advance tax. That one thing will show your good intention to IT department that you want to pay your taxes. So even if anything goes wrong they will try to help you.

Don't bring such thoughts in your mind that IT department cannot do anything. Everything is linked with your PAN and Aadhar. It's not of task for a government department to find out about your finances.

Yes we cannot escape from IT as everything is linked with PAN as it will help IT department to track our transactions but the real problem is the unjustified 30% tax which no one would be ready to pay and TDS as well. Stupid policies of government has killed Indian crypto market and even if Indians are using foreign exchange still it's a pain to withdraw or convert it into INR. I see people holding on to their asset due to these rules and assuming this will be relaxed but I don't think it can happen anytime sooner but we gotta figure out how to survive if government don't take these policies back.

[avikz]

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

In India, you are legally required to keep a record of all your transactional documents for 7 years. You have rightly said that anyone can receive income tax notice couple of years late. Firstly income tax will send you a demand notice and you are either require to pay that demand or to deny that demand if you have documented proof. If you do not submit your reply even after multiple notices from IT department, they can begin with legal proceedings against you.

But unless you have done something criminal or have not siphoned a huge amount of money, IT department will try not to take legal proceedings against you but will ask for payment of taxes. So my suggestion is to always pay your taxes. Also from next year onwards, start paying advance tax. That one thing will show your good intention to IT department that you want to pay your taxes. So even if anything goes wrong they will try to help you.

Don't bring such thoughts in your mind that IT department cannot do anything. Everything is linked with your PAN and Aadhar. It's not of task for a government department to find out about your finances.

Yes we cannot escape from IT as everything is linked with PAN as it will help IT department to track our transactions but the real problem is the unjustified 30% tax which no one would be ready to pay and TDS as well. Stupid policies of government has killed Indian crypto market and even if Indians are using foreign exchange still it's a pain to withdraw or convert it into INR. I see people holding on to their asset due to these rules and assuming this will be relaxed but I don't think it can happen anytime sooner but we gotta figure out how to survive if government don't take these policies back.

That's the goal Sir!

That's exactly the goal of the government to curb usage of cryptocurrency in India. Neither the Finance ministry, nor the RBI is favoring cryptocurrency circulation in India. I believe the governor already spoke negatively about cryptos in multiple public meetings. So when the biggest stakeholders of Indian economy is not favoring cryptos, how do you think that government will favor it?

In a couple of years time, I will probably look for exit from the crypto market completely if the situation doesn't change. I will sell off everything, pay off one time 30% tax and leave the market. believe me, you do not want legal hassles in India. 

[Bitcoin Smith]

Do not think that they will not go after individuals who did transactions that were less than 10 lac in a year. That is a myth as they generally go after accounts that have 10 lac and above transactions first and then later on they go after less-valued accounts.

Government hardly concentrates on small tax amounts, that is why I skipped 5-10 lakh slab and Just telling it from personal experience no one ever received any notices for not filing taxes even though all their transactions were happening via banking.

.
So you mean we can evade tax if our transactions are not worth more than 10L in total ? 
.

Not really if you read it carefully, we may not get notices soon if the amount we have to pay is less but after 5 years we may recieve notice from IT department to pay the taxes.

For now the situation is different, the condition and the infrastructure is different. It would be good to pay taxes otherwise the situation can get complicated.

Yep, but this changes seems more applicable to crypto users while I don't see any evident change in their action for a local vendor who earns 50L or even more via small grocery shop and not even paid the actual amount what they have to pay for it.

Also, I am interested to know what will be the charges if someone doesn't pay tax? I thought added amount along with tax money but I can see they can imprison an individual too up to 3 years, so if you know please share.

In India, you are legally required to keep a record of all your transactional documents for 7 years. You have rightly said that anyone can receive income tax notice couple of years late. Firstly income tax will send you a demand notice and you are either require to pay that demand or to deny that demand if you have documented proof. If you do not submit your reply even after multiple notices from IT department, they can begin with legal proceedings against you.

But unless you have done something criminal or have not siphoned a huge amount of money, IT department will try not to take legal proceedings against you but will ask for payment of taxes. So my suggestion is to always pay your taxes. Also from next year onwards, start paying advance tax. That one thing will show your good intention to IT department that you want to pay your taxes. So even if anything goes wrong they will try to help you.

Don't bring such thoughts in your mind that IT department cannot do anything. Everything is linked with your PAN and Aadhar. It's not of task for a government department to find out about your finances.

IT department can do anything they want and if I am not wrong they have the power to question anyone in India and one who doesn't cooperate may face other charge includes, and I am also saying the same, never skip your taxes just pay whatever amount is due or think smart and avoid taxes not evade which two are completely different.

My curiosity is did you ever saw any middle class business owners who don't pay tax faced any charges? Because I never saw while government concentrating 4000 traders who didn't paid tax for cryptos.

[avikz]

My curiosity is did you ever saw any middle class business owners who don't pay tax faced any charges? Because I never saw while government concentrating 4000 traders who didn't paid tax for cryptos.

That's more of a political issue! The majority of Indian businessmen are unregulated. They form a majority of the vote bank for any political party. If you want to start a roadside food stall, you need to first pay the local ruling party and then the police. If the IT department starts taking action on these small vendors for not paying taxes, the government is bound to change in the very next election.

The crypto traders are minority here. We are scattered and don't have political backing. So don't compare the crypto holders of India with the middle class business owners. It's a very different scenario for us!

[pakhitheboss]

That's more of a political issue! The majority of Indian businessmen are unregulated. They form a majority of the vote bank for any political party. If you want to start a roadside food stall, you need to first pay the local ruling party and then the police. If the IT department starts taking action on these small vendors for not paying taxes, the government is bound to change in the very next election.

The crypto traders are minority here. We are scattered and don't have political backing. So don't compare the crypto holders of India with the middle class business owners. It's a very different scenario for us!

That is what has been happening from the day this country got its independence. The political parties will only work for your benefit when they get the benefit. The vote bank politics is not something new as it is how democracy works I guess.

BTW, after the UPI success things have changed a lot as now a small-time vendor is paying tax which wasn't the situation earlier. Earlier we had a parallel economy where all transactions were made with cash now it is different. Even a pan shop will have a UPI QR code. I remember one of these guys I met sometime guy said that he won't use UPI whereas now he has been forced to use it.

Indian crypto community is not united that is true but that doesn't mean that they will not question the government for wrongdoings. The Indian government has disguised the current shadow ban as a threat to the economy. This is what the government has been doing since 2018 and this time they went further ahead.

[Bitcoin Smith]

My curiosity is did you ever saw any middle class business owners who don't pay tax faced any charges? Because I never saw while government concentrating 4000 traders who didn't paid tax for cryptos.

That's more of a political issue! The majority of Indian businessmen are unregulated. They form a majority of the vote bank for any political party. If you want to start a roadside food stall, you need to first pay the local ruling party and then the police. If the IT department starts taking action on these small vendors for not paying taxes, the government is bound to change in the very next election.

The crypto traders are minority here. We are scattered and don't have political backing. So don't compare the crypto holders of India with the middle class business owners. It's a very different scenario for us!

Well, unregulated business can be a factor but since the usage of digital payments then everything is transacted via banks so no matter who and what  business they do, they should pay taxes and report their income and it's lot easier for government and IT to track them and that's why they encourage digital payments in the first place.

[9TONNN]

They do send out notices to anyone who skips taxes and tackles cases. If one is dealing via Indian exchanges, there is more chances of getting such notices and they can send notices up to 7 years but the amount does matter. The tax has ruined it for everyone as it's hard while filing returns and plus, they demotivate you to deal in bitcoins by imposing 30% which is a huge amount to pay.

The use international exchanges thru VPN tunnels.