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How to show income for providing service relating to bitcoin

Tax queries 166 views 1 replies

Reena

Partner

221 Points Joined June 2017

A friend buys bitcoins in the US. Then transfers me the bitcoins which I sell in India (at a higher price because prices are higher in India). I then keep some money for myself and remit the rest of the money and the profit back to the friend in the US.

So what are the tax implications of this? How do I show that income?

example: Friend buy bitcoins for $100 (exchange rate is Rs 65). He transfers them to me. I sell them for Rs 8000 in India. I keep Rs 500 for myselff and transfer back Rs 7500 to the friend in the US. So he earns a profit and I earn some money for providing my service.

And are there some other regulations in play here?

Replies (1)

Navneeth Ojha

Student CA Final

116 Points Joined January 2014

Right now there exist no proper guidance over taxability on bitcoins, Income tax board is in its operation to enact them...meanwhile following may be adopted:

It seems that you act as a pure agent, entitled to your share in the form of commission and balance proceeds remitted back to principal (Principal and agent relationship).
Hence the diff of 500 like amounts received by you...will be taxable under the head "Profit and Gains form Business or Profession" and u can claim expenses incurred to earn such income.

Here make sure u don't hold any of bitcoins as ur investments...because in such case "taxability under capital gains" will attract on sale proceeds.