Indian investors have discovered that their income from the sale of bitcoins may be taxed from 20% to 30%.
Earlier this month the country’s Central Bank has published
third warning, which spoke about digital currencies, particularly bitcoin. December 5, the RBI said that cryptocurrencies pose potential risks, «financial, operating and legal protection of customers and their safety.»
As a result, the number of investors began to sell their coins. One of them shridhar (Shridhar S), an engineer working in an American IT company in Bangalore. After RBI warning, Sridhar sold 20 bitcoins last Friday in the amount of 21.8 million rupees. After that, his tax consultant told him that maybe the former owner of bitcoins will have to pay tax, as Sridhar took his income from sale to your Bank account.
Depending on whether digital currency as business income or capital gains, experts say that profits from its sale may be subject to a 20-30% tax. Jinendra Bhandari (Bhandari Jeenendra), partner at MGB – companies advising on tax issues, explained:
«If someone sells bitcoins, the profit definitely will be taxed, depending on whether it is classified as business income or as capital gains. Does not require a special amendment to the income tax act for determining the net profits from the sale of bitcoins».
According to Amit Maheshwari (Ashok Maheshwary), partner of Ashok Maheshwary & Associates LLP Chartered Accountants, tax authorities may consider the income from the sale of digital currency as the profit from the business, considering it as a speculative business covered by the standard tax rate. He also added:
«If someone is selling bitcoins, and the money transferred to his Bank account, this would entail either a long or short-term tax on capital gains depending on the period of ownership of cryptocurrency».
Maheshwari said that the long-term tax on capital gains to 20% may apply if the person owned the coins at least 36 months. Short-term profits are subject to 30% tax.
Due to the RBI warning, bitcoin owners in India began to hastily sell their coins. This is despite the fact that Indian retailers are starting to accept bitcoins as a payment method. Bitcoin is not officially recognized by the authorities, but not forbidden. This ambiguity forced the Supreme court of India to appeal to the government with a request to issue clear instructions regarding regulation of bitcoin in the country.