Bitcoin
Since the victory of Donald Trump in the US presidential election, there has been a record rise in the prices of all cryptocurrencies including Bitcoin. The price of Bitcoin had recently crossed 1 lakh dollars. Due to this, once again investors have their eyes on cryptocurrency. In such a situation, if you also invest in cryptocurrency, then know how much tax you will have to pay in India. Let us tell you that cryptocurrency is not legal in India but there is no restriction on investing.
Heavy tax will have to be paid at the rate of 30%
Cryptocurrencies, classified as virtual digital assets under Section 2(47A) of the Income Tax Act, are not yet recognized by the Central Government in India. However, taxation of Virtual Digital Assets (VDA) is governed by key provisions of the Income Tax Act – Section 115BBH and Section 194S. As per these provisions, a flat tax of 30% on the profit from selling VDA and 1% Tax Deducted at Source (TDS) on the transaction is mandatory. That is, if you invest in cryptocurrency and get profit from it, then you will have to pay tax at the rate of 30% on the earnings.
Cryptocurrency, Bitcoin legal or illegal in India?
Cryptocurrency is a digital or virtual currency that is secured by cryptography (code). It is almost impossible to counterfeit or use them twice. They exist on decentralized networks using blockchain technology. Blockchain is the technology that powers currencies like Bitcoin. Talking about the legal aspect, India is preparing a framework for cryptocurrency. The government had announced to impose tax on profits from cryptocurrency at the rate of 30 percent in 2022. However, despite the imposition of tax on income from cryptocurrencies, cryptocurrencies cannot be considered mandatory and clearly legal.
Currently, an inter-ministerial group (IMG) comprising officials from the RBI, Securities and Exchange Board of India (SEBI) and the Finance Ministry is considering a comprehensive policy for cryptocurrencies. The IMG is yet to release a discussion paper on this, which will give stakeholders an opportunity to put forward their views before taking a decision on India’s policy stance on crypto currencies.
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