Bad news, Bitcoin investors! Your earnings are now taxable
What's the story
World's largest cryptocurrency Bitcoin plunged a whopping 66% from its all-time high of $19,666 to $6,000 (Rs. 3.8L). As if this isn't bad enough, India's apex direct tax policy-making body CBDT's Chairman Sushil Chandra stated Bitcoin investors will now have to pay taxes on their earnings. Income Tax Department issued one-lakh notices to investors who haven't declared cryptocurrency earnings in I-T returns. Here's more.
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Profits earned on cryptocurrency investments taxable: Sushil Chandra
"People who have made (cryptocurrency) investments and have not declared income while filing taxes, and have not paid tax on the profit earned...we are sending them notices as we feel that it is all taxable," Sushil Chandra stated at a post-Budget seminar organized by ASSOCHAM.
Details
Earnings taxable if source is unexplained as per I-T laws
CBDT's Chandra said those who earned from Bitcoin would have to pay tax. People will be asked to declare the source of income, and if they don't pay tax, action will be taken against them. Income Tax Department conducted several cryptocurrency exchange surveys to know how many regular investors/contributors are there, how many have traded, and how many have registered themselves in India.
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No clarity on investments made by people
Sushil Chandra stated: "There is no clarity on (cryptocurrency) investments made by many people, which means that they have not declared it properly. We have informed all the DGs (Income Tax Director Generals) across India, they are issuing notices, and so that would be taxed."
Indian Government
Government issued warnings against investing in cryptocurrencies
The government has always been against trading in cryptocurrencies or virtual currencies, such as Bitcoin. It also stated that it would implement initiatives for regulating earnings by Bitcoin traders. Both the Centre and Reserve Bank of India have issued warnings several times to caution people about the potential risks involved in investing in cryptocurrencies. In Dec'17, Finance Ministry called virtual currencies "Ponzi schemes".
Information
Will not consider cryptocurrencies as legal tender: Arun Jaitley
Even while presenting Budget-2018, Finance Minister Arun Jaitley reiterated the government wouldn't consider cryptocurrencies, such as Bitcoins, as legal tender. Jaitley said the government is also working on intensifying the crackdown on cryptocurrency to stop its circulation and transactions through such digital assets.
Measures
Govt to take steps ensuring cryptocurrency is illegal in system
Finance Ministry is planning to take steps to crack down on virtual currencies, including appointing a regulator for "overseeing unregulated exchanges" trading in "crypto assets", claimed a Reuters report. A government appointed-panel, looking into virtual currency-related issues, is likely to submit a report by 31 Mar'18, according to Economic Affairs Secretary, SC Garg. According to the government, cryptocurrencies aren't permitted or protected in India.