Whenever the date to file Income Tax Returns (ITR) approaches, the crypto investors are baffled. Indian Government hasn’t released clear guidelines on how the crypto investors should proclaim their crypto earnings. But, most of the Indian cryptocurrency exchanges have advised their traders to proclaim their earnings as “Income from Other Sources”.
Amid the Bitcoin price rally, where the Bitcoin price reached its all-time high of $19,850.11 last month, the Indian Income Tax Authority is tracking all the crypto investors who are making money from it. By noticing the crypto profit earned by the investors, the authority has planned to demand taxes from the crypto investors.
“ZebPay has told our members since 2014 that the tax laws always apply to crypto earnings. We advise our customers to declare their income and be compliant. If the government can give us greater clarity about how to calculate and categorize income from crypto investing, it will be a win-win for the country and investors who want to get into this new asset class”, says Mr. Vikram Rangala, Chief Marketing Officer, ZebPay.
The date for filing Income Tax Returns for the fiscal year 2020 is December 31, 2020. The tax department was successful in collecting all the data about Bitcoin trades that took place through the banking channels before April 2018. In fact, it was before the Reserve Bank of India’s (the country’s central bank) crypto ban.
As per the reports from the Economic Times, the Indian Income Tax Department will make a note of all the crypto investors who are earning crypto profit. The department plans to impose 30% of taxes on the crypto profits made by trading. The department hasn’t categorized the crypto returns under any specific category.
“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,” says Sumit Gupta, CEO of CoinDCX Exchange.
Once the tax and regulation process is clear for the Indians, more and more investors may involve in crypto trading. The Indian government still doesn’t consider Bitcoin as legal tender, but holding cryptocurrencies is still legal. The Supreme court has lifted the ban on trading in virtual currency, cryptocurrency, and Bitcoins this year.
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Bitcoin is the top cryptocurrency in the world. At the time of writing, the Bitcoin price is $18,486.41 with a market cap of $342,776,731,966.