Bitcoin investors in India may soon have to start paying taxes on their crypto income. Business newspaper Economic Times recently published a report on crypto taxes, citing two sources close to the matter.
Income tax authorities tracking investors
The Indian Income Tax department is tracking cryptocurrency investors as Bitcoin reaches new highs. The tax department is keeping an eye on trades by tracking banking channels. The Reserve Bank of India banned cryptocurrency banking services in April 2018 but it was overturned in March this year.
Sumit Gupta, the CEO of Mumbai-based crypto exchange CoinDCX commented on the taxation and said,
“The tax authority can also monitor earnings of cryptocurrency investors registered through KYC/AML compliant exchanges like CoinDCX and through national identity documents such as the PAN card.”
Experts anticipate that tax on cryptocurrencies could be as high as 30%. Tax experts are also suggesting their clients file Bitcoin returns as capital gains, similar to gains made on stocks.
Bitcoin is a speculative business
According to tax and consulting firm AMK Global’s partner Amit Maheshwari, active trading in Bitcoin will be considered speculative in nature and the regular tax rates will apply. The authorities may treat less frequent transactions as capital gains, which could be taxed at short-term or long-term tax slabs, depending on the period of holdings.
The Indian tax authorities have not decided on the taxation bracket for cryptocurrencies yet. As of now, investors can declare their income from cryptocurrencies in the ‘Income from Other Sources’ category. More clarity on cryptocracy’s legality and taxation status will help in improving investor participation in the sector. The sector still sees millions of dollars’ worth of trade but it is occurring in a legal grey zone, without regulation or taxation.
In September, there was news about the government eyeing a new law that would prohibit cryptocurrency trading completely, complete with fines and jail time for people dealing in the sector.