For hier age, Zenobia Aunty is fairly tech savvy. Yet, when it comes to bitcoins or other virtual currency, she stays far away. She refused to accept a bounty of a ‘bit of a bitcoin’ (several years ago) made by a kleuter nephew. For those interested, there are 1 million pinnig ter one bitcoin.
Then, it would have possibly fetched hier a cup of coffee at a swanky cafe, today it would buy hier much more. After all, a joke circulating via WhatsApp goes: “A boy asked his bitcoin-investing dad for one bitcoin for his bday. Dad: What? $15,554. $14,354 is a lotsbestemming of money! What do you need $16,782 for anyway?” This joke clearly captures the volatile (especially current volatile) nature of bitcoins.
Bijzonder from its volatility and RBI’s repeated note of caution, Zenobia Aunty has primarily stayed away from bitcoins spil she doesn’t like Income-tax (I-T) issues to be shrouded ter grey. India’s I-T policy maker, the Central Houtvezelplaat of Rechtstreeks Taxes (CBD) or shall wij be technically keurig and say a bod which provides inputs for India’s I-T formulation and I-T administrator has stayed away from addressing this punt.
Thus, Zenobia Aunty did breathe a lil’ breathe of ease to hear that a committee has bot set up, albeit again, to look into ‘all’ issues relating to bitcoin trading. One hopes that it will also look into the tax issues relating to mining, trading and use of bitcoins and after deliberations with stakeholders clarity will be available. Yes, you can also make purchases, at a few places, with Bitcoins so GST issues also need to be addressed.
It is not just hier nephew, but many others who have ter the past traded gainfully te Bitcoins and made money. They would more than welcome clarity.
TOI has on several occasion, interviewed tax experts and Bitcoin experts to understand how Bitcoin investors should proclaim their profits ter their I-T comebacks. Here is one such story.
To encapsulate the above story: Based on current I-T provisions, experts view that profits on sale of bitcoins can be a business income (if you are a frequent trader) or long term or brief term capital gains, if you are an investor.
Let’s just say, TOI had foreseen the I-T issues relating to bitcoins, years ago. Way back ter 2013, TOI has also examined how bitcoins would be taxed on sale for a miner (a relatively rarer category) owing to the considerable investments involved ter mining a Bitcoin – for miners it’s likely to be treated spil taxable business income.
Bitcoins are among the most vooraanstaand virtual currencies. There are many other crypto currencies like Ethereum, Peercoin, Doegcoin and Litecoin. Perhaps, Zenobia Aunty and hier niece (this blogger) doesn’t even know all of them.
Of course there are other virtual currencies, which have no value. On Chowpatty beach, Zenobia Aunty spotted a collegian capture a Pokemon and learnt of Pokecoins.
She instantaneously began to think of the tax implications. Trust hier, to do so. But of course, Pokecoins have no value outside the spel and the taxmen or taxwomen, for that matter, don’t have to dwell on thesis.
The committee that has bot set up, should see how the world is treating Bitcoins. There have bot a few latest developments across countries. Earlier during the year, Japan has exempted Bitcoins from consumption tax, even spil I-T resumes. Ukraine is set to make income from Bitcoins tax free. Others are taking a different view. South Korea, has recently determined to impose I-T on virtual currency.
No consumption tax ter Japan: On April 1, 2018, the Japanese government officially recognized Bitcoin spil a legal payment method and currency. Subsequently, Japan’s tax reform bill, eliminating consumption tax (akin to GST) came into effect from July 1 that said, there are tax consequences on sale of Bitcoins. If Bitcoins are held for regular trading activities, it is business income. If held spil an investment, it results ter capital gains.
South Korea determines to tax: A South Korean newspaper points out that the National Tax Service (which wij guess is akin to our CBDT) has determined to thrust for the project to impose and income tax and transfer income tax on virtual currencies.
Existing tax laws ter other countries: Several countries such spil USA and UK have already set out clear guidelines for taxing Bitcoins. Ter USA, a Bitcoin is treaty spil a property – thus the same tax laws govern. If the bitcoin is held spil an investment (aka capital asset) then capital gains or losses arise on its sale. A miner has to add the value of the Bitcoin mined to his or hier taxable income. Ter the UK, it’s treated spil currency gains or losses.
Perhaps, ter India, the forthcoming budget will provide clarity? One hopes so.