Indian Government may recognize and levy Tax on Bitcoin
On April 20, Bitcoin enthusiasts in India were experiencing a moment of joy. It was because the news came in that soon Indian government may perhaps recognize Bitcoins, monitor and regulate Bitcoin transactions and even levy tax on Bitcoins.
In early April, Kryptomoney.com posted an article about the legal status of Bitcoin in India at that point of time. Bitcoin was hyped in Indian markets because of being termed as a ponzi scheme by a BJP MP in a parliament session. (click here to read the article)
But now after witnessing some positive steps from higher authorities towards Bitcoin, that day is not far when Bitcoin will get a legal status in India.
At the meeting of the committee constituted by Reserve Bank of India to look into the activities related to virtual currencies, it came to known that committee will make it’s recommendations to government between May15 and May 20. The final decision will be made by Government.
The media reported that “The government is planning to planning to regulate Bitcoin and have necessary taxes on it. This means all the activities related to Bitcoin will be properly monitored and applicable taxes will be levied. The RBI will issue guidelines for investing in Bitcoin”.
Looks like the Indian Government along with Reserve Bank of India is now too serious about virtual currencies such as Bitcoin. The government has also established a Inter- Disciplinary Committee to examine and study the virtual currencies and give it’s report to government by June. Various representatives from Department of Economic Affairs, Department of Financial Services, Department of Revenue (CBDT), Ministry of Home Affairs, Ministry of Electronics and Information Technology , Reserve Bank of India ,NITI Aayog and State Bank of India will be members of the committee.(click here to read full article)
What next about Bitcoins in India?
Bitcoin demand is growing day by day in India. People in India are now understanding the power and advantages that these virtual currencies can offer. Various investors are also adding Bitcoins to their portfolio. And after these positive news coming in, people in India will continue to invest in Bitcoins more and soon Indians may perhaps rule the Bitcoin market.
From the viewpoint of Taxation, it is still unknown. The government will give it’s decision about taxation once it gets recognized. But according to the knowledge of the author at KryptoMoney.com, following may be the expected tax implications on Bitcoin:
- If any amount is earned by buying and selling of Bitcoins on a regular basis, the income would be charged under the head “Profits and Gains from Business and Profession”
- If any amount is earned by investing in Bitcoins for a longer period of time, the income may be charges under the head “Income from Capital Gains”
Further Capital Gains are divided into two categories that is Long Term Capital Gains and Short Term Capital Gains each having different rate of tax.
- The income is charged under Long Term Capital Gains if investment done in any asset (except shares/mutual funds) is redeemed after twenty four months (previously it was thirty six months). For Shares/mutual funds, the income will be taxed as Long Term Capital Gain if the investment is redeemed after twelve months.
- The Income is charged under Short Term Capital Gains if the investment in asset is redeemed before twenty four months ( except for shares/mutual funds ) and twelve months ( in case of shares/mutual funds)
It is possible that the time period to be considered while taxing the capital gain income from Bitcoin or Virtual Currencies may be same as that of Shares/Mutual Funds or even below that. ( NOTE: This statement is just a viewpoint of the author and it shall not be considered as a fact or law )
After Japan, India may be the second country to give Bitcoin a legal status in Eastern part of the world. Also, Russia may recognize Bitcoins in 2018.Click here to read full article.
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