Cryptocurrency tax Financial News

cryptocurrency traders who have moved their virtual digital assets (VDAs) to wallets of offshore exchanges like Binance face a dilemma as they fill their Income tax return (ITR) forms in which for the first time VDAs find a mention. They are unsure whether to disclose their ‘overseas’ crypto holdings. Does transferring the coins from a wallet in an Indian exchange to a digital purse offered by an overseas exchange makes the VDAs a ‘foreign asset’ in the eyes of the Income tax (I-T) authorities? If it does, then hiding the information would be a gross violation. However, if they disclose the VDAs (transferred through the blockchain network) as ‘foreign assets’, it may be later construed as a breach of the Foreign Exchange management Act (FEMA). Simply because moving cryptos originally purchased in India to a wallet abroad can be interpreted as cross-border flow of currency in the garb of VDAs. And, reporting of any foreign asset without any matching remittance of currency through the banking channels could be questioned later. No clear answers

Having shifted the coins offshore using the Blockchain network to avoid stifling regulations, they have sensed that sharing the information with Income tax (I-T) authorities could invite as much trouble as hiding it. Declaring their crypto holdings — originally bought on Indian exchanges and now parked in wallets with overseas bourses — in the 'Foreign Assets (FA) schedule would be an indirect admission of having undertaken a transaction that could be in violation of the Foreign Exchange Management Act (FEMA). However, a non-disclosure of a 'foreign asset' could put them on the wrong side of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act — a harsh law that came into force in 2015 and can be used to impose criminal sanctions. (Under the FA schedule, an assessee has to provide details of foreign assets or income from any source outside India in a specific section of the ITR).Techie Vs Taxman Interestingly, however, given the nature of cryptos, which are different from regular assets like bank accounts, properties and securities, the dilemma of taxpayers could also put the tax office as well as practitioners in an unchartered territory.

WazirX and Zebpay, citing their Trader Sentiment Survey. The survey included about 9,500 respondents throughout the country. The domestic exchanges collectively conducted the survey and included only those traders who were active from the beginning of the year till April 15. The survey aims to highlight the mood of crypto traders over higher taxation. According to the results, 83 per cent of traders believed that the recent tax implementation deterred their trading frequency. 29 per cent of the respondents said that they traded less than the pre-tax period.

The GST Council, is considering to levy 28 per cent GST on cryptocurrencies.

The GST Council is considering levying 28 percent tax on cryptocurrencies and related services, sources told CNBC-TV18. The proposal is likely to be tabled in the next GST Council meeting.

FAQs on taxation of crypto, virtual digital assets in works

India with nearly 1.4 billion people is one of the world's fastest-growing markets for crypto trading

blockchain ecosystem valued in excess of $15 billion. But it must hurdle potential barriers to growth in the shape of newly prescribed taxes that, some others believe, is more help than hindrance to this perception-challenged sector. The 30% tax (and TDS) on crypto income announced in the Budget is seen by some as “recognition” of the blockchain industry. But many others also believe a high tax regime and stringent taxation terms could stunt growth in a sector populated largely by bootstrapped start-ups. “A high tax rate is very discouraging… it’s also a growth deterrent,” said Sidharth Sogani, founder — CEO, Crebaco, a rating agency for digital currencies and businesses that work with them. “Higher tax incidence reduces the scope for all players in the ecosystem; the crypto world is not just about exchanges that facilitate trading or investments.”

In a reply to a query from Chhaya Verma, a Rajya Sabha member from Chhattisgarh, she clarified that if there is a gain from crypto transactions, the government has the right to tax them, but does not necessarily make them legal or illegal. Banning or not banning crypto assets will depend on the inputs given by consultants, Sitharaman said in the upper house of Parliament.

Many see government's announcement as an acknowledgment of crypto industry as emerging asset class

A Supreme Court bench observed last week that offence of money laundering is a more «serious and heinous crime than murder» as it hampers the entire economy. Even non-fungible tokens (NFTs) are now prone to money laundering. According to a report by Blockchain data platform Chainalysis, a small but growing portion of activity on NFT marketplaces could be attributed to money laundering.

“I earned over Rs 50,000 last year in crypto through grants and programmes but prefer to take my salary in US Dollars. Many Web3 companies offer to pay salary both in crypto tokens and dollars and many choose crypto tokens,” said 23-year-old Yash Pandey (name changed on request). “The coins that I earn help me to learn and experiment with building new things.”

crypto community has started an online protest against the 30 per cent tax on crypto currencies announced by FM Nirmala Sitharaman on Tuesday. Until late Thursday, the hashtag # reducecryptotax was trending on Twitter. The change.org petition was started by Aditya Singh, Co-founder of CryptooIndia, and then amplified by popular social media influencers like Sandeep Bahuguna, Pushpendra Singh, and Kashif Raza.

“They are in a grey area. It’s not illegal to buy and sell crypto,” Finance Secretary T. V. Somanathan said in an interview to Bloomberg Television. “We have now put in a taxation framework that treats crypto assets the same way we treat winnings from horse races, or from bets and other speculative transactions.” After years of dilly-dallying on how to treat cryptocurrencies, the government’s budget Tuesday proposed taxing income from the transfer of virtual assets at 30 per cent — effectively removing any uncertainty about the legal status of such transactions.

Here are the new tax rules on cryptocurrency: * Sitharaman announced that gains arising from the sale of virtual assets would be taxed at a flat rate of 30 per cent without any deduction or exemption.