Despite no laws, Indian minister says traders must pay taxes on Bitcoin 🚨 This article is 4 years old...
Despite no laws, Indian minister says traders must pay taxes on Bitcoin
The country has enjoyed a rocky relationship with cryptocurrencies and the industry has largely operated in a legal grey area so far. But times are changing.
2 min read
Updated: Mar. 30, 2021 at 2:55 pm UTC
An official from India’s ministry of finance said Monday that all gains from trading cryptocurrencies like Bitcoin were liable to income tax, as per a report on markets outlet Financial Express.
The sector exists in a legal grey area in the country, and investors were so far (seemingly) confused about whether to declare their gains or not. But as it stands, the taxes need to be paid and there’s no running away from that.
Taxes on Bitcoin, crypto gains
As per the report, Anurag Singh Thakur, the Minister of State for the Finance Ministry, cited the Income Tax Act of 1961 and stated that as the ‘income from whatever source’ was mentioned in the law, all gains from trading cryptocurrencies were taxable according to that same law regardless of whether they were explicitly mentioned or not.
“Irrespective of the nature of business, the total income for taxation shall include all income from whatever source derived…the gains arising from the transfer of cryptocurrencies/assets are liable to tax under a head of income,” Thakur said, adding:
“(The) supply of any service, if not specifically exempted, is taxable under GST and no service related to cryptocurrency exchange has been exempted.”
However, he acknowledged that there was a lack of data maintained by the government on crypto earnings as there was no provision in the Income Tax act to capture data on cryptocurrency earnings.
India’s Central Board of Indirect Taxes and Customs (CBIC) issues unique Services Accounting Codes (SAC) to classify each service under GST. As a result, cryptocurrencies—as they are not recognized in India—do not have a SAC code.
This lack of a SAC for cryptocurrencies means that GST collections and figures are not available with the government at this time.
India targets crypto space…but not for the good
Thakur’s comments come weeks after the Indian government said it would release laws to control and regulate the burgeoning crypto sector in the country, one that is flourishing but operates largely as an underground industry.
Earlier in February, the Corporate Affairs Ministry said publicly-traded Indian companies dealing with cryptocurrencies were mandatorily required to disclose the profit or loss incurred on Bitcoin traders and the total value of the cryptocurrencies they held.
Company executives, in addition, were asked to declare all their cryptocurrency holdings and any deposits or advances for the purpose of trading or investing in the sector in their balance sheets.
Meanwhile, Thakur added that the government would soon take a decision on the recommendations made by the Inter-Ministerial Committee (IMC) on cryptocurrencies in India, one the country’s crypto hopefuls eagerly await.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.