Tax and Cryptocurrency in India. If you look at the last two years you will find that humanity is in a time of uncertainty, we all know that the global pandemic of COVID19 has done serious damage to our way of life, we are not just talking about economic damage. Still, we can see that this is something that people are most afraid of, which is why many have come to realize the importance of passive income.
One of the most efficient ways to do this is by investing in cryptocurrencies. If you look at the value of some of these currencies, you will find that they are quite volatile, which means that you can make quite a lot of money in a short time.
For those of you who don’t know, the terms and conditions you must adhere to when tracking cryptocurrencies depend on where you live, which means that virtually every country has a unique regulation that must be followed. India this is why we are giving you a few things to consider when starting this type of trading in India.
1. The Legality
If you start your research on cryptocurrencies in India, you will find that there have been some problems over the past few years which means that many people were not sure whether or not they were legal in this country. The government has not made a clear regulation of what traders can expect. Fortunately, the situation is very different now. There are no laws that prohibit this.
Instead, the government took the approach of treating them like any other asset, such as real estate or gold. Without a doubt, this was great news for Indian traders. If you look at some approximations, you will find that the amount of money created by these transactions is nearly $ 1 trillion. If cryptocurrencies were banned, many people would certainly be in great trouble.
Now we would like to talk about taxes, for example, we will see the example of how Bitcoin is handled, we have said that it does not prohibit regulation, but it is almost unregulated in any way that traders are obliged to pay taxes. Since there is no new regulation for this financial area, traders have to adhere to the older regulations.
One of them was approved in 1961 and the other in 2017. The percentage you have to pay naturally depends on the particular transaction. We have said that cryptocurrencies are equated with gold and similar items. Of course, you should look at the income and a certain percentage of it has to be paid, the investment does not matter.
We mentioned that the above regulation says a lot about how cryptocurrencies should be handled; however, many people are unsure how to handle the mining process in this regard. It should be noted that the law passed in 1961 deals with these assets as capital gains; however, it does not cover the two main factors of the process, we speak of improvement and acquisition costs.
If you look at some other sources, most of which can be found online, you will find that the mining process is widely viewed as something taxable. For example, the value of the currency is a major factor that indicates the percentage you will have to pay. Whenever you mine a coin you need to look at its current value and calculate the percentage.
4. Is It a Business Activity?
Depending on the volume of transactions, cryptocurrencies can be considered a commercial activity, for example, the question of whether they are considered a commercial activity if you sell these assets quickly, as you know if you sell them immediately, which means the number of Transaction indicates that their activity revolves around a specific business.
If it doesn’t, you can see that every single transaction is processed by itself. However, if this settlement exceeds a certain limit, they will be considered part of your business, no matter how valuable those transactions are. You will surely agree that this is a little strange, we are talking about an issue that has yet to be resolved by the government.
5. Capital Assets
We mentioned that cryptocurrencies are considered capital assets. In this case, it doesn’t matter whether it is perceived as a business or not, especially in cases where it is held for future investments, as you can see, it depends on how much you have those funds stored in your electronic wallet. The percentage you have to pay is 20%.
In case they are perceived as some kind of short-term capital gain, the percentage you have to pay for taxes depends on each case, without a doubt this is one of the most important factors to consider. Initiate any type of transaction, make sure you are familiar with all the words you will find in this regulation, otherwise, you may have problems in the future.