How to pay taxes on your cryptocurrency investment in India.

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How to pay taxes on your cryptocurrency investment in India.


With cryptocurrency prices soaring over the last few years, many Indians have ranked in instant wealth. But paying taxes on this income has turned into nightmare.

This is so because under India tax laws,the nature of virtual currency investments is unclear. What is certain is there's no escaping taxes.

In December 2017, the income tax (IT) department surveyed several cryptocurrency exchanges in the country to understand their modus operandi and user base. Since the , notices have repottedlr been served to about 500,000 investors for non-payment of taxes. Inthehaa past few months, the bourses, too, have appeared on the Reserve Bank of India and the govt radar.

The RBI has forbidden banks from dealing with these exchanges and Investors in any fashion, while a lan el formed by NaremdrN Modi government is working on draft regulations for digital currencies. In such volitile times, the exchanges themselves have been urging customers to not skip paying taxes.

As the revised deadline for finding I-T returns approaches, here's a look at what investors could do.

Individual investors:-

The tax treatment of cryptocurrency continues to be in the grey Zone, it is open to interpretation, warm chartered accountants {CAs}.

In case of gains, you have to state profits or capital gains maybe by you from transaction in Cryptocurrencies year -  wise with statements showing the workings.

The premise of capital gains is that an investment will be held for a certain period of time so that its value appreciates. These taxes are divided into short-term and long-term.

In case of shot-short gain, the amount is added to the income and taxes according to the tax slab that an individual falls under, for instance, anyone who earns over Rs:-10 lakh ($14,614) will be taxed at 30percent..

It falls under the long-term category, it will be taxed at 20 percent. The tax rate can go down is applied, which allows one to adjust for inflation during the period these investments were held. Every year, the Central Board of Direct Taxes releases the cost inflation on which these assessments are done.

For Traders:

For Traders, earnings from virtual currencies are treated as income from business.


Under this, certain expenses related to business, office maintenance, such as buying a comoucom, Internet expenses,office rent, administration costs, etc., Can be deducted.

If you are a trader and your turnover crosses the Rs 2 crore mark, you need to go for a tax audit by a charted accountant.

Another key issue is choosing the right form to file returns.
Dependimg on whether an Individual is treating it as capital gains or I come from other sources or business

Another key issue is choosing the right form to file returns. “Depending on whether an individual is treating it as capital gains or income from other sources or business...

Thanks Regards,

Vinay Kumar.