Cryptocurrency: Nowadays many people invest in cryptocurrencies. Many people have also earned a lot from this. If you are also thinking of investing in cryptocurrencies then this news is for you only. Ever since the Supreme Court lifted the ban on cryptocurrencies, speculations about tax on it started.
New Delhi. The use of cryptocurrency is increasing rapidly in India. This has opened up many new opportunities for business and income. Some people are trying to earn more money in less days and invest in cryptocurrencies, while some people use it as payment in restaurants and shops. Right now there is a lot of doubt about how the government will impose tax on this cryptocurrency. The move to allow cryptocurrency to be used in business after the government’s first ban on cryptocurrencies has raised doubts further.
In 2018, the Reserve Bank of India banned banks and other financial institutions from facilitating transactions in other cryptocurrencies such as bitcoin, ethereum, dogecoin, and more. Later, in early 2020, the Supreme Court allowed the use of cryptocurrencies. Even after this, cryptocurrencies have not yet got the status of legal currency. RBI has said that it is working on cryptocurrencies and will proceed with caution.
Now cryptocurrencies will also be taxed
Now you have to pay tax on cryptocurrencies. The government is planning to split the tax on the basis of cryptocurrencies and their use. It is believed that this tax will be applicable for investment and payment in cryptocurrencies. The government has already made it mandatory for companies dealing with virtual currency to disclose the profit or loss made on the transaction. Apart from this, companies have also been asked to disclose the amount of cryptocurrency in their balance sheets. But till now no law has been made to levy tax to control their transactions.
There are mainly four scenarios of income from cryptocurrency.
1.Mining
Mining cryptocurrency is a self-made capital asset. Subsequent sales of such bitcoins usually result in capital gains.
2. Transfer from Real Currency to Cryptocurrency
The valuation of cryptocurrency as an investment depends on how long it has been held. For this, many people invest in cryptocurrencies with their real money.
3. Trading in Cryptocurrencies
The income from trading in cryptocurrencies will increase the income in the business. Hence profits can be taxed as applicable tax slab.
4. Received on the sale of goods and services
Profit from cryptocurrency can be considered as a source of income. That is, the income earned from it will be taxed.
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