From this year, the government has requested input from leading tax experts on whether revenue from cryptocurrency trading or investment may be regarded as business income rather than capital gains.
The Indian cryptocurrency is eagerly anticipating tax provisions on crypto-related revenue in the upcoming Budget 2022, which will be released on February 1. According to reports, the administration is seeking taxes opinions from a variety of specialists. While the much-anticipated cryptocurrency bill, which has been set to be introduced in Parliament during the winter session of 2021, has been postponed, the Centre is working to specify the taxes of revenue obtained through bitcoin trading or investment.
According to reports, the Centre is debating whether crypto-related revenue should be recognised as company income and capital gains. The law defines cryptocurrencies as commodities and suggests separating virtual currencies based on their intended purpose. According to ET, cryptocurrency investors might face a significant rise in tax burden, with a tax rate on crypto-assets ranging from 35 to 42 percent.
According to prior reports, the government intends to impose a 1% GST on crypto exchange, which would be received at source, and to delegate regulatory authority to SEBI. The government may levy an 18 percent GST on bitcoin trading, according to ET, since cryptocurrency-related activities may be taxed in the top income level by the Centre. Facilitators, brokerages, which link buyers and sellers, and trading platforms, which are mostly electronic in nature and provide market surveillance and algorithmic trading infrastructure to participants, are three possible classifications for cryptocurrency exchanges.
According to media reports, India’s cryptocurrency laws would become more rigid after the government adheres to the guidelines put forth by the United States. Individuals who have watched their crypto investments rise throughout the year and have swapped them for other digital currencies without converting them to rupees will be subject to taxes. Given that each payment, regardless of whether it is paid in crypto, is earnings in the ownership of the recipient, investors will be compelled to compute and pay taxes on their crypto asset’s returns in fiat terms. After that, the investor can use the taxed funds to deal in crypto assets once more.