Need to file ITR

Hi,

There are no specific law on the gain/loss arises from trading in cryptocurrency. You can treat them business income or capital gain transaction depending on the intention,frequency and volume of transactions.

- For business income- File ITR 3 or 4

- For Capital gain- File ITR-2

Thanks

Dear Sir,

Hope you are doing well !

There is no specific provision in the Income-tax Act, 1961 about the taxability of cryptocurrencies. However, keeping in view the general provisions of the Income-tax Act, cryptocurrencies could be deemed as capital assets if they are held as an investment by the taxpayer.

Therefore, any gain arising from it should be taxable as capital gains. If a cryptocurrency is held for more than 36 months from the date of purchase, it will be considered as long-term capital asset. And if held for less than 36 months, it will termed as a short-term capital asset. For capital gain, you will have to file ITR 2.

On the contrary, if transactions in bitcoins are substantial and frequent, it could be held that the taxpayer is trading in cryptocurrencies and the resultant profits would be taxable as business income. In such case, you will have to file ITR 3 or ITR 4 (presumption taxation scheme).

Thanks & Regards,

Payal Chhajed

Dear Sir,

Capital gain or business income: According to Section 2 (14) of the Income Tax Act, 1961, a capital asset means a property of any kind held by a person, whether or not connected with his business or profession. The term ‘property’ has no statutory meaning, yet it signifies every possible interest that a person can acquire, hold or enjoy.

So, bitcoins could be deemed a capital asset if they are purchased for investment. Any gain arising on transfer of a bitcoin shall be taxable as capital gain. However, if the transactions in bitcoins are substantial and frequent, it could be held that the taxpayer is trading in bitcoins, and the income would be taxable as business income.

Please find below the relevant article for your complete understanding:

https://www.thehindubusinessline.com/opinion/taxing-cryptocurrencies-in-india/article10012267.ece

Thanks & Regards,

Payal Chhajed

Hi,

In the absence of any specific law for crypto currencies, the gain/loss can be treated as capital gain/loss and you can file ITR 2

However, if these are a part of your business you can show these as business income also. In that case you will have to file ITR 3 or ITR 4 as the case maybe.

Hi

There has been so much chaos on taxability of cryptocurrencies. No matter they are illegal in India, any person who has traded in the same has to report such income in ITR and pay taxes accordingly.

Depending upon the nature, intent and volume of investments, income from cryptocurrencies can be reported as:

1. Income from Business or profession (ITR 3 / 4), OR

2. Capital Gains (ITR 2)

It has to be decided first as to how the income has to be reported.

We may help you with tax return filings.

Whether it is legal or not but if there is any income either business income of capital gain it will be taxed accordingly

Dear Sir,

As such there is no specific law for cryptocurrency tax treatment.

If money in crypto currency is invested as an investment than like any other investment option like shares, mutual fund units etc, cryptocurrency is a capital asset within the meaning of section 2(14) of the Income tax Act, 1961 and any gain realised on sale of cryptocurrency will be subjected to capital gains tax under the Act. If it is held for more than three years than gains on its sale will be long term capital gains and liable to tax at flat 20% rate. The indexing option will also be available in case of LTCG. If it is held for less than three years than gains on its sale will be added to investors other income and subjected to tax at the slab rate. Accordingly you can file ITR2.

If however, the transactions in cryptocurrency are frequent and on a scale which suggest that the sale/purchase is being done on business scale, than profit earned from trading in crypto currency may be taxed as `profits and gains from business’ and taxed at the applicable slab rate. Accordingly you can file ITR3/4.

There is no hard and fast rule, its a matter of perception.

Warm Regards,

Karishma Chhajer

Further, cryptocurrency , as a medium of payment, has neither been authorized nor been regulated by any central authority in India. Further, no set rules, regulations or guidelines have been laid down for resolving disputes that could arise while dealing with bitcoins. Hence, bitcoin transactions come with their own set of risks. However, given this background, one cannot conclude that bitcoins are illegal as, so far, there has been no ban on bitcoins in India.

Hi

You have got 2 options. You may either show it as a business income or as capital gains. It would depend on your intent and volume of transactions.

The turnover is 20 lacs. How much is the profit earned? You may also opt for 44AD whereby declaring 6% of the turnover as profits.

Let us know if you have other incomes and how you want to classify the trading income from cryptocurrencies as, so that correct ITR can be selected.

Hi,

- Illegal income are also taxable. Please file the return.

Thanks