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Tax on Cryptocurrency

Ritika Kapoor (Freelancer) (43 Points)

14 May 2020

Hello Community,

I have a query regarding investments in cryptocurrencies.

I'm a freelancer and my earnings are less than 2.5 lakh per annum, therefore I'm not required to file ITR. I wish to invest my savings in cryptocurrency.

Suppose I invest in the year 2020 and withdraw my investments in 2022, how will the taxations be processed?

Please let me know your thoughts.

Thanks in advance :)

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9 Replies

Asha Kanta Sharma (Manager - Finance & Accounts) (36380 Points)
Replied 14 May 2020

With reference to Section 2(14) of the Income-tax, Act 1961, cryptocurrency could be deemed as capital assets if they are purchased for the purpose of investments by the taxpayers and any gain arising on transfer of such cryptocurrency shall be taxable as capital gains. Its further classification into short-term or long-term capital gain would depend upon the period of holding of cryptocurrency. If they are held for more than 36 months from the date of purchase, it will be considered as long-term capital asset, otherwise a short-term capital asset. Short-term capital gains are taxable as per the slab rates applicable to a taxpayer. And long-term capital gains are taxed at the flat rate of 20% with the benefit of indexation. However, if the transactions in cryptocurrency are substantial and frequent, it could be held that the taxpayer is trading in cryptocurrency. In this case, income from sale of cryptocurrency would be taxable as business income.

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Asha Kanta Sharma (Manager - Finance & Accounts) (36380 Points)
Replied 14 May 2020

Https://coincrunch.in/2019/01/08/income-tax-cryptocurrency-india/

Asha Kanta Sharma (Manager - Finance & Accounts) (36380 Points)
Replied 14 May 2020

Https://cleartax.in/s/bitcoins-taxes-india

Asha Kanta Sharma (Manager - Finance & Accounts) (36380 Points)
Replied 14 May 2020

Https://cleartax.in/s/bitcoins-taxes-india

Ritika Kapoor (Freelancer) (43 Points)
Replied 15 May 2020

Thank you so much for your revert sir. Really appreciate it.

Just one more thing, since i do not file an ITR now as my Income is less than 2.5 lac. Suppose I sell my investments make capital gains by 2022 and file an ITR in that year so will it be fine ? Or do I have to file an ITR this year to show that i i have made investments in Crypto?

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Asha Kanta Sharma (Manager - Finance & Accounts) (36380 Points)
Replied 15 May 2020

You need to show any gain and loss in the year of receipt of crypto currency. Not required to file ITR Now.

Ritika Kapoor (Freelancer) (43 Points)
Replied 15 September 2020

Hello,

Iam a seller on Flipkart from Delhi (Gst is also registered from Delhi) and wish to send my products to Flipkart's warehouse in Bangalore and Kolkata ( since I'm eligible to send products to these Warehouses). However, I'm unable to list these Warehouses in my gst portal. Can you please help me as to how should I proceed?

Ritika Kapoor (Freelancer) (43 Points)
Replied 15 September 2020

Hello,

Koley Toner (2 Points)
Replied 03 February 2025

Hi!

Very good question! The taxation of cryptocurrencies can vary greatly from country to country, and it is important to understand how it works in your region. In India, for example, cryptocurrencies are not yet considered legal tender, but the tax system may treat profits from cryptocurrency transactions as income from other assets. If you sell cryptocurrency, you may have to pay capital gains tax, which depends on how long you held the asset. Short-term investments (if you sell within 3 years) are taxed at a higher rate, while long-term investments (if you hold for more than 3 years) may be taxed at a lower rate.

I would recommend consulting a tax advisor to understand exactly what taxes you are liable to pay in your particular case. However, it is important to remember that cryptocurrency taxation is a rapidly evolving area, and it is worth staying up to date with the latest changes in the law.

If you want to deepen your knowledge of cryptocurrency investments and how to trade effectively, I recommend the learn.binany.com platform. There you can find a lot of useful materials and strategies for beginner traders.

Good luck with your investments!