The Indian government recently announced that the nation will be adopting a new tax law for cryptocurrencies, bringing about clarity on crypto taxation in one of the world’s most populous countries. This will hopefully eliminate some of the confusion around how crypto taxation works.
A recent article from Reuters states that India has 10 cryptocurrencies under its control and sees them as “intangible assets” rather than currencies. The report also goes on to say that Bitcoin is likely to be taxed more than other coins and could potentially bring in a tax rate over 40%. This means citizens can expect bigger bills if they deal with cryptocurrencies, but it remains unclear whether this increased tax burden would deter people from investing or not.
How much will the tax be in cryptocurrency in India ?
India has a 3.5% GST, meaning that you can expect to pay around 10% whenever you buy or sell bitcoin or any other cryptocurrency. The final rate can vary based on the state of where you are, as well as your living situation. This means that people who live outside of India may have to pay more than those who live in India. You can keep an eye on these taxes with the help of various crypto tax software in India.
The government has a team that is creating a draft bill for making Bitcoin as legal tender. The Fundamental Rights (Protection) Bill will also be passed ahead of the budget; this will allow Bitcoin payments. Cryptocurrency is likely to enter into the framework of new financial products and services which are allowed under existing laws of RBI guidelines, i.e. banking, insurance and stock exchanges. These tax rules apply to both individuals and corporations.
Bitcoins and other cryptocurrencies like Ethereum or Monero will fall under property status when it comes to taxation rates and will receive the same treatment as a plot of land would. So if you bought bitcoin in 2017 and sold it at a profit, you’d have to pay income tax on the gains that aren’t covered by your exemptions. In addition, capital gains are also taxable when not covered by your exemptions.
Currently, cryptocurrency is taxed according to its nature as a currency.
The Central Board of Direct Taxes (CBDT) has said that cryptocurrency is considered foreign currency and will be taxed as per the provisions of the Income Tax Act, 1961. Under this Act, you can be liable for crypto tax on gains if you have not kept proper records of your investments and how much you have made from them. Being an untraceable currency means it’s extremely difficult to determine your earnings after selling the coins. As a result there are different crypto taxes in India for
different cryptocurrencies. The income tax department has initiated action against several cryptocurrency traders in India for not complying with the anti-money laundering norms and regulations.
If you are facing any difficulties in calculating crypto taxes then, i will recommend you to use Binocs. Binocs is an online crypto tax management software which will automatically calculate and file tax for your crypto holdings.