Have Bitcoins? Be Careful! Undeclared Profits From Bitcoins Can Attract Up To 200% Penalty!
A special committee will be formed, which will decide how to tax bitcoin earners, and whether GST can be applied on bitcoins.
The unprecedented increase in bitcoins valuation has certainly rattled the Indian Govt., and they are now pretty serious about the income which is being generated via bitcoins in India.
A special committee would be soon formed, which will decide how to tax bitcoin earners, and ‘millionaires’, and whether GST can be applied on bitcoins.
Interestingly, RBI hasn’t yet officially allowed Indians to trade in bitcoins, but haven’t banned it as well. Under these circumstances, does it makes sense to tax the earnings from bitcoins?
Supreme Court is already hearing a plea related to regulation of bitcoins, and things are pretty uncertain right now.
Undeclared Bitcoins Profits? Ready To Pay 200% Penalty!
Reports are emerging from reputed publications, regarding Govt. latest move to milk bitcoin profits from Indians, and no one will be spared it seems.
If we believe Business Standard, then a 30% capital gains tax can be mandated on all bitcoin profits, if they are held for less than 3 years, and 20% capital gains tax, if they are held for more than 36 months. A concept borrowed from stock trading.
A senior Govt. official close to the developments said,
“Bitcoin taxation is a grey area at the moment. We are yet to look into it in detail. A panel may examine each issue. There are no guidelines at the moment. A clarification may come,”
Besides, some heavy penalty has been devised for those, who fail to declare profits from bitcoins. A penalty of 50-200% is being devised for such instances, when a tax payee fails to declare bitcoin earnings in a financial year, besides levying an interest of 12% per year, for the same.
Govt. Committee Will Decide Fate Of Bitcoin Profits in India
The value of bitcoins has surged past $19,000 (currently $16,000), and this astronomical surge of over 1200% value within a year has clearly unsettled the Govt. and RBI.
Reports say that a special panel be would be established, which will decide how to tax bitcoin earnings, and more importantly, whether GST rules can be applied on bitcoin investments or not.
This is in directly contradiction to what RBI had recently said about bitcoins in India, while ‘warning’ Indians against its usage:
“it (RBI) has not given any licence or authorisation to any entity or company to operate such schemes or deal with Bitcoin or any VC.”
This was RBI’s 4th warning against bitcoin usage in the last few years, and it clearly shows that although RBI is not willing to allow bitcoins in India, they are not banning it as well. And now, they want to tax it as well.
But, to be fair to RBI, they have already admitted that blockchain is a technology which will immensely help banking system in coming years, and bitcoins are based on blockchain tech.
Pretty confusing situation for a person who is a bitcoin investor, and wants to be clean in the tax rules and regulations.
Supreme Court has already asked the Centre to respond to a plea regarding bitcoin regulation in India, and the matter is subjudice.
In April this year, there were rumors of taxation policies for bitcoin users in India, and now, with recent reports, it seems that Govt. wants to indirectly control bitcoins, but cannot come out in the open, and accept that bitcoins has the power to change everything.
We will keep you updated.