The Indian Bitcoin community, which initially had only a handful of people saw a sudden influx of new members following the government’s overnight decision to demonetize certain high-value currency notes.With two of the largest denominations, INR 1000 and INR 500 losing their value, many people decided to minimize their dependency on the country’ legal tender which is subject to the whims and fancies of the government, making Bitcoin the obvious choice.Since then, the country’s Bitcoin community has continued to witness untethered growth.In spite of the positive growth, not many people are still convinced about the validity and legality of Bitcoin.A recent article on one of the country’s news publication attempts to clarify the present legal status of the digital currency and the recent initiative by the government to introduce cryptocurrency regulations.The country’s central bank, Reserve Bank of India has on multiple occasions warned people about the risks associated with Bitcoin and other digital currencies.

These warnings had many believe that it is illegal to use or possess Bitcoin in the country.bitcoin het thoiThe article clarifies that Bitcoin as of now doesn’t have a legal status and it is definitely not illegal in the country.bitcoin hobbies reviewsThe situation may soon change as the Ministry of Finance could soon introduce Bitcoin regulations to govern the use of cryptocurrencies within India.rc hobby bitcoinThe implementation of Bitcoin regulations will automatically bring cryptocurrency related dealings under the purview of Income Tax Act.bitcoin john bridgeCurrently, profits or gains from trading Bitcoin is considered as income and applicable taxes as well as exemptions will be relevant to such transactions.bitcoin kabul eden bahis

The article further clarifies that there are no taxes applicable on purchase of Bitcoin and the same holds good for holding them as well, at least until they are sold or exchanged to avail other benefits in cash or kind.bitcoin kademliaAccording to reports, there are speculations about the introduction of capital gains taxes on Bitcoin and other cryptocurrency holdings.Short-term holdings may incur a tax of 30% on profits whereas gains from long-term holdings could be taxed at 20%.The exact tax slabs will be clear only after the implementation of Bitcoin regulations.But until then, the details provided in the article should help people understand the cryptocurrency better, with respect to existing regulations.Ref: DNA | Image: NewsBTCAlthough bitcoins have been thought to be illegal, it is far from true, but the government is taking measures to regularise the use of virtual currency Many people have termed bitcoins as an illegal form of currency and even the Reserve Bank of India (RBI) had also warned the investors of the potential risks involved in dealing with Bitcoins.

Bitcoins had also given rise to many theories about its taxability i.e.how the taxation will work in case you sale or transfer your bitcoin.Legal status of bitcoins in India Dealing in bitcoins in India is not yet illegal.However, bitcoins have yet to be regulated, which means that the government is not regulating this currency the way it regulates Indian Rupee or any other form of currency.An interdisciplinary committee has already been set up by our government to explore the framework regarding virtual currency.Treatment under Income Tax Act Any profit or gains made on dealing, trading or buying-selling bitcoins is surely taxable as it gets covered under the definition of income under section 2(24) of Income Tax Act which is a wide section to include every income unless it is exempt under the act.Let’s assume that you don’t have any income other than the income you derive from the sale or trading of bitcoins and the same is less than Rs 2,50,000 i.e.basic exemption limit up to which a person does not need to pay any tax, then in that case you do not need to pay any taxes.

But in case your income from bitcoin alone or including other sources like salary or business income is more than the basic exemption limit then the same needs to be declared and you need to pay taxes on the same.In fact, you need to file your tax return as well and also pay advance tax on it.When will bitcoins provide income?Let us break this in to three stages as follows and understand at which stage you need to pay taxes: On purchasing bitcoins: There is no tax liability on simply purchasing bitcoins.When the value of the bitcoin begins to appreciate: As long as you are holding your bitcoin investments like you do with your stocks or property where in spite of rise in your stock portfolio or property valuation, you do not pay any tax till the time you actually sale it off and book the profit or gains.Similarly, mere appreciation in the price of bitcoin will not make you pay any taxes till the time you actually sale it or transfer it to someone in exchange of any other benefit in cash or kind, irrespective of the magnitude of the appreciation.

On sale or exchange of bitcoins: This third important scenario actually gives rise to taxability, it means the moment you sell or trade your bitcoins or exchange with any other thing say Indian or foreign Currency currencies or even trade your bitcoins as a barter for buying any other thing or paying for any kind of purchases, the taxability arises.It means that in any of these scenarios, the resulting gains will become taxable, you need to declare, compute and discharge the tax liability as mentioned earlier in the article.The author is a Chartered Accountant and the Chief Gardener & Founder Director of Money Plant Consulting, a leading Tax & Investment Planning Advisory Service ProviderMUMBAI: India is not isolated from the rising popularity of bitcoins, which got a boost post-demonetisation.According to industry sources, nearly 300-plus enthusiasts of the cryptocurrency trade daily on Indian bitcoin exchange platforms.Most of these platforms boast of user registrations of more than a lakh.

Thus, many taxpayers in India need to understand the I-T nuances of their bitcoin transactions.Curiosity prompted Rakesh M, a Bengaluru-based techie (identity changed), to make his first investment in bitcoins.He sold his investment during the financial year 2016-17 (year ending March 31, 2017) and earned a profit.The perplexing issue for him is: How should he treat the income on sale of the bitcoin for I-T purposes?As a salaried employee, he has to file his I-T return by July 31.The Central Board of Direct Taxes (CBDT) has not yet issued any guidance.Tax authorities in many countries, such as the US, treat bitcoins a capital asset in hands of investors, with the sale resulting in a capital gain.The I-T department can catch up if you try to evade tax on sale of bitcoins.Benson Samuel, co-founder, Coinsecure, a trading platform for bitcoins in India, points out, "When you sell your bitcoins over an exchange such as Coinsecure, the money flows directly into your bank account.The transaction is completely transparent.

Even though not obliged to do so, most bitcoin exchanges also adopt KYC norms for their customers."Bitcoins in India are unregulated but are not yet illegal.However, the RBI has on occasion cautioned investors of inherent risks.An inter-disciplinary committee set up by the government is examining the framework of virtual currencies."That said, even if bitcoins were illegal, income earned needs to be declared and tax paid," says an I-T official.Harshal Kamdar, tax partner, PwC India, says, "Taxability of bitcoins is a nuanced is sue and will depend on facts of each case.In the absence of CBDT guidelines, the logical conclusion is to treat profits on sale of bitcoins as 'capital gains', unless the person is in the business of trading bitcoins, in which case it would likely be 'business income'.However, we have seen instances, where to be on the safe side, individuals have preferred to treat it as 'income from other sources' where the relevant slab rate of I-T applies, as opposed to a 20% tax with indexation (if applicable), on long-term capital gains".

Capital gains for a bitcoin investor Nishith Desai, founder of an international law firm which is working closely with the bitcoin industry, says, "Given the wide nature of definition of capital assets under Section 2(14) of the I-T Act, the purchase of bitcoins, if it has been made for the purpose of investment, should be treated as a capital asset.Thus, any gains arising on transfer (ie: sale) should be characterised as capital gains."Caution point: Short-term capital gains are taxed at the applicable I-T slab rate, which for those with a taxable income of more than Rs 10 lakh is 30% plus applicable surcharge and cess.On the other hand, long-term capital gains (LTCGs) attract a tax rate of only 20%.The time period for which an asset is held before its sale determines whether it is a longterm asset that is eligible for a lower rate of tax on sale.For equity , the holding period prescribed is just 12 months."The period of holding of bitcoins should be like any other property.If they are held for three years or more, it should be considered longterm and if less than shortterm," says Desai.

Hot tip: Indexation benefit (which is an adjustment to account for inflation for the period between purchase and sale of a capital asset) can be availed of.This would reduce the total tax outgo on capital gains.A cost inflation index (CII) figure is issued by the CBDT each year and the prescribed formula is to be followed.Business income for a bitcoin trader It may be a bit perplexing to understand whether one would be regarded as an investor or trader.Desai points out, "The CBDT has in the past issued a circular (4 2007) which, after taking into consideration various judicial precedents, has set out various tests to determine whether shares are held as investment or stock in trade.The same parameters can also be applied to bitcoins."For instance, if the transactions in bitcoins are substantial and frequent, it could be said that the individual is trading in bitcoins.In this case, income on sale of bitcoins would be a business income, to which the applicable slab rate of income tax would apply.