0 comment What is Cryptocurrency? Cryptocurrency is a Digital currency that can be exchanged online for goods and services,but uses an online ledger with strong cryptography to secure online transactions.Cryptocurrencies work using a technology called Blockchain.There are more than 4,000 cryptocurrencies in existence but Bitcoin has a large lead as compared to any other cryptocurrency.Bitcoin is more accessible, with more exchanges, more merchants, more software and more hardware that support it.In April 2018 , RBI banned banks and other regulated entities from supporting Crypto transactions after digital currencies were used for frauds.
There is no law prohibiting Indians from buying/selling cryptocurrencies in India.However, the Supreme Court of India quashed the banking ban in 2020.How to do Deal in Cryptocurrency? There are many Brokers available in the market for trading in Bitcoins.You can buy/ sell fractional shares of Bitcoins also via an exchange.In India, most exchanges offer a minimum capital requirement as low as Rs.100 – Rs.500.
These exchanges may charge a small fee for enabling these transactions.While choosing your platform, make sure it is simple to use.Verify the details of the team behind the platform.And most importantly, try to avoid platforms that do not have a KYC in place as it may not be very secure.On 6 May 2020, Bitcoins was traded at Rs.7 Lakhs around and on today it is trading at 40 Lakhs.
Applicability Of GST on Trading in Cryptocurrency? The taxable event in GST is supply of goods or services or both.
Various taxable events like manufacture, sale, rendering of service, purchase, entry into a territory of state etc “Services ” means anything other than goods , money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.
So Basically, Crptocurrency is not Money.So it is covered under GST .Buying and selling of crypto currencies will be considered under the category of supply of goods.
Trading may attract 18 percent GST .Applicability of Income Tax on Cryptocurrency? Taxation of income in India is governed by the provisions of the Income Tax Act, 1961.First, it’s important to know that the gains derived from the sale of cryptocurrencies can be classified as either capital gains or business income.This classification will decide which tax return form one needs to file and how much tax will be levied on the gains.
Therefore, bitcoin could be deemed as capital assets if they are purchased for the purpose of investments by taxpayers.Any gain arising on transfer of a cryptocurrencies shall be taxable as capital gains.If investors hold cryptocurrencies for 36 months or more, the gains would be taxable as long-term capital gains (LTCG), and less than 36 months, it would be short-term capital gains (STCG) .However, if the transactions are substantial and frequent , it could be held that the taxpayer is trading in cryptocurrencies.In this case, the income from sale of cryptocurrencies would be taxable as business income.Its taxability would be same as of the other incomes.
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