Mumbai: 2017 was an enthusiast for Bitcoin, one of the world's most popular cryptokururia. For the first time, cryptocurrency was close to reaching $ 20,000 for Bitcoin or ₹ 13.4 million. Suddenly, from the tea seller to the wealth managers, everyone was looking for space exploration. Since December 2017, Bitcoin prices have declined. Currently, it gets around $ 6,000. However, some bittoin holders got good returns. If you are wondering how to calculate tax on this and the process of filing it, then you should know what you should know:
Investment or trade
Bitcoin tax is different depending on your holding. "The first step is to see whether you were doing business or investing it as an investment. If it is an investment, then you have to pay capital gains. If you are doing business in bitcoins then it is a business income Therefore, if your business is more than 2 crore, then you are liable for tax audit, "said Gautam Nayak, a chartered accountant based in Mumbai. The Income Tax Department has not specified classification for trade and investment.
"You have to consider many factors like period, frequency of transaction, time spent on it and intent of transaction, all of which will determine whether it is an investment or business income," said the hero.
If you are an investor, you have to pay capital gains. "Capital gains can either be short-term or long-term. There is no provision for bitcoin and other cryptosystems in the Income Tax Act. In the absence of any provision, we believe that the general provision will be applicable, so if you are less than 36 months If you keep bitcoin for time, then short term capital gains will be applicable. Taxman service taxman Dot Com Deputy General Manager Navin Wadhwa said, "If you hold Bitcoin for more than 36 months, long term capital gains tax (LTCG) will be applicable."
Short term capital gains will be linked to your salary income and tax will be levied at the slab rate. In the case of LTCG, you have to pay 20% tax with the benefit of indexation.
Read also: Scheduled Caste RBI prevents crypto ban: What's next for crypto exchanges, investors?
Filing Returns
So far, you have got your form 16 from your employer. Now is the time to enter your income tax return (ITR). If you have the advantage of selling betoken, then you have to choose the correct ITR form first. "ITR 1 is not for you, Wadhwa said, depending on whether it is considered to be capital gains or business income, you have to select ITR2 or ITR 3. Experts have suggested that if you benefit from bitcoin If you have earned, take professional help in filing returns. "It can be difficult for individuals to calculate capital gains. Therefore, you may need help from tax experts, "said Wadhwa.