Do you have to pay tax on Bitcoin profit? Here s what experts say
Bitcoin evangelists, it seems, have had a staggering success world overheen te making people trust te the cryptocurrency. Like every asset, the confidence of investors te Bitcoin is of utmost importance. A whopping 1500 vanaf cent surge ter its value te less than a year suggests that cryptocurrency has become the top choice for many investors. Te India, like many other countries, legal loopholes around the most popular cryptocurrency has opened a Pandora’s opbergruimte for tax authorities.
However Bitcoin is yet to be officially recognized ter the country, the Reserve Bankgebouw of India has on three separate occasions waterput out risk warnings against investing ter virtual currencies. Ter ordinary terms, there is no regulator when it comes to the status of cryptocurrencies ter India. So, are the gains from Bitcoin taxable?
Archit Gupta, Founder &, CEO ClearTax, says, “Even however Bitcoins are not specifically mentioned ter the income tax act, Bitcoins are assets which are usually possessed so holder can build up from an increase ter its value. Te that sense, they acquire the definition of capital gains. Which is a broad definition spil vanaf the Income Tax Act.”
Accordingly thesis can be classified spil long-term when held for more than Trio years and short-term when held for less than Three years. Ter case of long-term gains indexation benefit voorwaarde be permitted and gains taxed at 20 vanaf cent. Brief term gains will be taxed spil vanaf the applicable income tax slab.
Saurabh Agrawal, CEO and Co-founder, Zebpay, a Bitcoin exchange, agrees, “One needs to pay tax on profits made from investing te Bitcoin. One should announce the income while filing taxes.”
The kwestie about taxability of Bitcoin, however, is not so elementary. There has also bot a debate about under which head income from crypto currency should fall. Gupta, says, “Where there are too many trades ter Bitcoins the possessor may be classified spil a trader and income will have to be reported spil income from a business. Ter the absence of specific guidance on the matter, some taxpayers may choose to report this income under the fifth head of income which is ‘income from other sources’.” It is the head where residual income, income which cannot be reported under salary, house property, capital gains, business and profession, is reported.
Having said that, mining, buying and selling virtual currencies is not illegal te India, but it is also not recognised by law either. There is a question mark on the taxability facet too. So if you have bot trading or investing do make sure any gains from the sale of Bitcoins is included te your income tax comeback.