Crypto Traders In India May Need To Pay Tax On Bitcoin Income

There are always somewhat rumors surrounding the Indian cryptocurrency regulations and the latest one is that Indians may need to pay taxes on crypto income. Currently, there is no framework for regulations related to crypto in India despite the March order of the Supreme Court nullifying the Reserve Bank of India’s banking ban on cryptocurrency exchanges. 

The crypto trader could need to pay tax under five criteria which are listed by Advocate Mishra. 

They are as follows: 

1. Foreign account reporting: If you have used a foreign exchange or foreign-based wallet in the last year you may need to fill up forms. 

2. Cryptocurrency tax requirements for transactions: If crypto comes under Category then, given the differing capital gains tax rates for long-term vs. short-term holdings, these two methods can give you slightly different tax obligations.

3. Cryptocurrency tax requirements for investments: If you are using crypto as an investment you are liable for taxation.

4.Crypto as gifts or inheritance: If someone gifted you crypto as a gift it follows the standard rules of all major gifts.

5.Taxation of ICO/STO /IEO/ DeFi investments: As tokens are sold as a part of securities offering so they can be in the same way as traditional securities. In the case of ICO, tokens are not considered as ‘goods’ which means they are not security offerings. As a result, issuers may be liable for income tax from the moment the initial sale of tokens takes place.

The above crypto-related tax-liabilities are based on the existing income tax laws and security laws. It is to be noted that there is no specific appeal made from the government side about the same and going by a couple of articles published in the mainstream media.