Crypto gains and taxes
A comprehensive resource on crypto assets taxation
At Koinex, our topmost priority is to keep our users updated with recent developments concerning their trading accounts, crypto asset holding and crypto asset trading gains. We appreciate your suggestions and feedback for us and on popular demand we have been adding new tokens to our platform every week. There are a lot of surprises in the pipeline and Team Koinex is hustling hard to continuously bring you a horde of additional features and an improved user experience on our platform.
The past few weeks have been a busy time for us as we are approaching the end of the financial year. Considering this, we would like to bring to your notice that after recent changes in law, the deadline or last opportunity to file your IT returns for FY 2015–16 and FY 2016–17 is March 31, 2018. Any delay in doing so would invite penalty and strict action. We would like to keep you informed that profits gained from holding or trading in crypto assets are considered as capital gains and hence are taxable.
This post focuses on educating our users on paying taxes on their crypto-asset capital gains.
Notice from the IT Department
In December 2017, the Income Tax department had issued notices to around 500,000 individuals trading in crypto assets. The notice read: “In case of gains, you have to state profits or capital gains made by you from transaction in cryptocurrencies year-wise with statements showing the workings. If you are holding bitcoins or other cryptocurrencies as on date, you have to furnish details of the same” among other details. The notice directed the individuals to submit details of total purchase and sale of crypto assets from websites registered outside of India and peer-to-peer transfers made in cash.
Taxation on crypto assets
Crypto assets are not legally recognized as currencies yet and in light of this, it is clear that the IT department has classified profits generated from crypto assets under income from business/ profession for day traders and income from capital gains for investors. For day traders, tax will be levied according to the slab in which their income fits. In case of investment in crypto assets, profits generated on holding cryptos for 3 years or more would be subject to long-term capital gains tax and on holding it for less than 3 years it would be subject to short-term capital gains tax.
To avoid facing penalty in case of a scrutiny in the future, it is advisable for you to declare your profits generated from crypto assets and file the IT returns before the deadline. It is also advisable to reach out to a tax consultant for filing the same.
DISCLAIMER: Discidium Internet Labs Private Limited (Koinex) does not provide tax, legal or accounting advice. You agree and acknowledge that this material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Before making any decision or taking any action, you should consult your tax and/or legal advisor.
Taxes on profits generated from crypto-assets are classified under capital gains. It is mandatory to declare the same. The deadline for filing IT returns for FY 2015–16 and FY 2016–17 is March 31, 2018.