Know about Cryptocurrency and its Taxability

Last Updated On: Dec. 3, 2021, 11 p.m.
...

KNOW ABOUT CRYPTOCURRENCY AND ITS TAXABILITY

What is Cryptocurrency?

Cryptocurrency is a Digital currency that can be exchanged online for goods and services,but uses an online ledger with strong cryptography to secure online transactions.

 

There are many Brokers available in the market for trading in Bitcoins.

You can buy/ sell fractional shares of Bitcoins also via an exchange. In India, most exchanges offer a minimum capital requirement as low as Rs.100 – Rs.500. These exchanges may charge a small fee for enabling these transactions.

While choosing your platform, make sure it is simple to use. Verify the details of the team behind the platform. And most importantly, try to avoid platforms that do not have a KYC in place as it may not be very secure.

On 6 May 2020, Bitcoins was traded at Rs.7 Lakhs around and on today it is trading at 40 Lakhs.

 

 

Applicability of Tax on Cryptocurrency:

INCOME TAX:

Taxation of income in India is governed by the provisions of the Income Tax Act, 1961.

First, it’s important to know that the gains derived from the sale of cryptocurrencies can be classified as either capital gains or business income. This classification will decide which tax return form one needs to file and how much tax will be levied on the gains.

Therefore, bitcoin could be deemed as capital assets if they are purchased for the purpose of investments by taxpayers. Any gain arising on transfer of a cryptocurrencies shall be taxable as capital gains.

 

GOODS AND SERVICES TAX:

The taxable event in GST is supply of goods or services or both. Various taxable events like manufacture, sale, rendering of service, purchase, entry into a territory of state etc

“Services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

 

It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.

So Basically, Crptocurrency is not Money.So it is covered under GST.

Buying and selling of crypto currencies will be considered under the category of supply of goods. Rate of GST charged for trading cryptocurrency is 18%.

ABOUT LEGAL SUVIDHA

Copyright © 2013-2021 - All Right Reserved