Cryptocurrencies like Bitcoin are taxed and regulated in different ways
Cryptocurrencies like Bitcoin are taxed and regulated in different ways in different countries. The process of cryptocurrency trading itself is subject to varying forms of regulations by financial authorities in the various countries where it takes place. One country that provides little to no regulatory clarity about these virtual assets in India, prompting many crypto users hoping that they had income taxes on Bitcoin in India explained to them, in simple terms.
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Now, India as a country is still quite undecided as to how it should go about regulating crypto assets as an asset class.
What you must note is that no clear cut rules exist in Indian legislation so far to help us understand how Bitcoin and other cryptocurrencies like it can be effectively taxed in the country.
As a result, the chartered accountants draw their own logical conclusions, in the light of how taxation rules usually work in the country. The following is a brief description of how that works.
Income Taxes on Bitcoin in India
Any income from cryptocurrency trading,that is earned by buying and then selling it off at a price higher than the one it was bought at, is usually not considered a part of one’s normal income.
Instead, it is considered to be a capital gain. Capital gain rules usually apply to profits earned by selling off some kind of moveable or immovable asset.
Therefore, as a taxable thing, Bitcoin is treated more like an asset (like gold or real estate owned by a person, that may be sold off for a profit) than just a currency. Therefore, capital gains tax is applied on Bitcoin-related income earned by an Indian in the country.
What must be remembered, however, is that capital gains tax rates vary depending on whether you have been holding on to your crypto for a long term or a short term. If you income is above the 10 lacs per annum slab, then you will have to pay 30% for short term Bitcoin-based earnings and 20% for long term earnings of that kind.
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