The deadline for filing income tax returns for individual taxpayers has been recently extended till December 31. There are many taxpayers who have made big money by investing in cryptocurrencies. In such a situation, there is confusion about how that income will be taxed. The government’s position regarding cryptocurrencies is not yet clear. However, according to media reports, it is believed that it will be given commodity status in the cryptocurrency bill and all the rules ranging from tax will be according to that.
If you have also invested in crypto currency, then you should know about the opinion of tax experts on whether you should pay tax on the earnings from it and if you do then on what basis to pay tax. TaxBuddy’s Sujit Bangar told CNBC TV18 that income from investments in cryptocurrencies can be taxed in two ways. He says the same rules apply to tax on cryptocurrency holdings as are applicable to capital assets pursuant to Section 2(14) of the Income Tax Act.
Share cryptocurrency investment information
Bangar said that if a taxpayer has invested in cryptocurrencies and his taxable income is more than Rs 50 lakh, then such taxpayers should disclose the digital currency investment in the income tax return filing. When he sells the cryptocurrency holdings, he will either incur a loss or gain. As per capital gains rule, tax has to be paid while filing tax return after sale.
Capital gains tax rules
Talking about capital gains tax rules for cryptocurrencies, if the holding is less than 36 months then it comes under short term capital gain. If it exceeds 36 months, it is called long term capital gain. Tax will be levied according to which category the taxpayer’s investment falls under.
No capital gains tax on miners
Rajasekhara Reddy of Pallala Chartered Accountant and India Filing said bitcoin holders can be of two categories. The first may be a bitcoin miner, while the second will be an investor. In the case of mining, when he sells bitcoins, it will not be called a capital gain. Overall, tax experts say that if you have a portfolio in cryptocurrencies, give this information in your return filing. Also, take the help of an expert before filing the return so that the taxpayers do not face any kind of trouble.