We are seeing that crypto is getting next-level popularity, and just yesterday, Bitcoin made a new all-time high. Along with this, the use cases of crypto are increasing, such as people buying things, trading, and investing in different cryptocurrency sectors. But when it comes to taxation, the confusion starts. Do you know? Oil and gold are commodities, and the Euro and USD are currencies. Now, in which category does cryptocurrency fall? This is the biggest question. Though we can see in the name that it is known as a currency, different countries have different rules for crypto.
What Is a Commodity and What Is a Currency?
Currency's clear meaning is money; by using it, you can buy products and other things. Japanese yen, INR, USD, and euro are the currencies. The commodity is a basic good, such as oil, wheat, gold, and more. The commodity is useful and valuable, but this is not money.
Now the big question comes to mind in which cryptocurrency should go?
How the Tax Authorities See Crypto
First of all, we are going to talk about the USA because it is a superpower and ahead in technology, and according to US law, crypto is like a commodity, and it is not treated like currency. They believe crypto is property.
Do you know capital gain tax? It is paying taxes on profit, and this is what crypto laws follow. If you are a US citizen and bought crypto and later you get a profit more than you invested, then you have to pay the tax.
This is even applicable when you buy simple things using crypto, for example, buying a tea using crypto, and you have to report it; this is what the IRS wants. Clearly, it is a taxable asset in America.
In the European Union: A Mixed Approach
There are different ways of treating crypto in the European Union because there are multiple countries in the EU. Crypto is not taxed with value-added tax in many places in the European Union. And the clear meaning of this is considering crypto as currency.
You have to pay taxes when you sell your crypto assets, but yes, if you have earned a profit. So, somewhere it is treated as a commodity, and somewhere it is treated as a currency in the EU.
In Asia: Different Views
Talking about Japan, it is treated as a property, and tax applies to profit. India is strict on crypto and applies a 30% tax and 1% TDS per transaction, which means traders will not be able to trade because every time they trade, they have to pay 1% TDS. In Singapore, crypto is not taxable until you do business. And in China, it is completely banned, and crypto is a threat to them.
Let me give you a final answer
Every country has different rules about when I talk about most cases, then we can conclude that crypto is a commodity. Why? For tax purposes. We have checked the laws in different countries, and you can see for yourself that it is treated as a commodity. Paying taxes is necessary on profit, but unlike India and China, all countries follow the same rule.
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