New Delhi: Cryptocurrency has taken the global markets by storm and is drawing huge number of young investors, especially after Bitcoin prices peaked this year.
Today, the millennials are the most engaged lot in cryptocurrency trading. Owing to the popularity of digital currency, institutions have also started buying into this asset class.
The cryptocurrency market, transcending national boundaries, promises a bright future but is equally prone to collapse or meltdown as has been seen after China’s announcement of crackdown.
Keeping global upheavals aside, even if one is minting money from crypto trade, it’s all not tax exempted and he/she is liable to pay taxes as per laws.
How crypto earning is taxed in India?
According to reports, the government is planning to compartmentalise virtual currency under different heads and also how taxes will be spread out. Finance Ministry is also learnt to have formed a committee to define contours on which earnings from crypto-earnings will be taxed.
For now, no separate guidelines are on paper for this asset class, which is new not just for investors but also for tax experts.
Ketal Dalal, Katalyst Advisors founder tells a leading business daily that income from cryptocurrencies are taxable according to the tax slab of the investors and an additional cess of 4% is also applicable as per income slab.
“If the total taxable income of an investor is below the taxable income of Rs 2.5 lakh, one can adjust this shortfall against the short-term gains. Long-term capital gain on crypto assets attract a capital gains tax of 20%, where the investor will get the benefit of indexation,” Dalal told ET.
Another crypto Amit Singhania of Shardul Amarchand Mangaldas and Company told the leading business daily that the crypto currencies are not treated at par with listed securities.
If your income from crypto trading has been classified as business income, it will be taxed at the rate applicable for ‘income from business’. If the crypto income hasn’t been put under business income or capital gains, it will be treated as income from other sources.
The government is yet to come out with detailed guidelines on crypto trading in the country. If the cryptocurrencies are treated as an asset or commodity, not much is likely to change but if separate guidelines for taxing digital currencies are issued, the mode of taxation on your earnings will change.
