When you take a look at the last two years, you will see that humanity is in some uncertain times. We all know that the global pandemic of COVID-19 has inflicted serious damage to our way of living. We are not just talking about financial damage. Still, we can see that this is something that people are the most afraid of. For that reason, many have perceived the importance of having a passive income.
One of the most efficient ways to do that is to invest in cryptocurrencies. If you take a look at the value of some of these, you will see that they are pretty volatile. Meaning, you can earn a significant amount of money in a relatively short amount of time. Sure, you would need to select a proper tool to use. If you are interested in taking a look at some of these, be sure to visit bitcoin-storm.live.
For those who don’t know, the terms you will need to meet when you start cryptocurrency trace depend on where you live. Meaning, pretty much every country has its unique regulation that needs to be followed. Today, we would like to talk about India. For that reason, we will provide you with a couple of things you need to be aware of when you start this sort of trading in India.
Table of Contents
1. The Legality
When you start your research about cryptos in India, you will see that there were quite a lot of problems in the last couple of years. Meaning, many people weren’t certain whether they are legal in this country or not. We can see that the government didn’t come up with a clear regulation on what traders can expect. Thankfully, the situation is widely different now. There are no laws that prohibit them.
Instead, the approach government opted for is that these are treated as pretty much any asset like real estate or gold. Without any doubt, this was great news for Indian traders. If you take a look at some approximations, you will see that the amount of money sum caused by these transactions is almost $1 trillion. Surely, if cryptos were banned, a lot of people would be in a lot of problems.
Now we would like to talk about taxation. For instance, we will take a look at the example of how Bitcoin is handled. We’ve said that no regulation bans it. But it is not regulated in almost any way. The only thing known about it is that the traders are obligated to pay tax. Since there is no new regulation to cover this field of finances, traders must oblige to the older regulations.
One of them was passed back in 1961, and another one was passed in 2017. Naturally, the percentage you will need to pay depends on every particular transaction. We’ve said that cryptos are considered as the same thing like gold and similar items. Naturally, you would need to take a look at the profits, and a certain percentage of them should be paid. The investment doesn’t matter in this regard.
We’ve mentioned that older regulation says a lot about how cryptos should be handled. However, many people are uncertain about how they should handle the mining process in this regard. What needs to be said is that the law passed in 1961 treats these assets as capital gains. However, it doesn’t cover the two main factors of the process. We are talking about improvement and costs of acquisition.
If you take a look at some other sources, most of them can be found online, you will see that the mining process is widely considered as something that should be taxed. For instance, the value of the coin is a primary factor that will indicate the percentage you will need to pay. Whenever you mine a coin, you will need to take a look at the current value and calculate the percentage.
4. Is It a Business Activity?
Depending on the volume of transactions, the cryptos can be considered as a business activity. For instance, the question is quite simple, are they considered as a business activity if you sell these assets fast. As you know, if you sell them instantly, that means that the number of transactions will indicate that your activities revolve around some business.
If this is not the case, you can see that every particular transaction will be handled on its own. But when this turnover surpasses a certain limitation, these will be considered as a part of your business activity, no matter how valuable these transactions are. You will certainly agree that this is a somewhat strange thing to experience. We are talking about an issue that remains to be resolved by the government.
5. Capital Assets
We’ve mentioned that cryptos are considered capital assets. In this case, it doesn’t matter whether it is perceived as a business activity or not. Especially in cases when they are held for future investment. As you can see, this depends on how much you have kept these funds in your e-wallet. In this case, the percentage you will be obligated to pay is 20%.
In case they are perceived as some sort of short-term capital gains, the percentage you will need to pay for tax will depend on every individual case. Without any doubt, this is one of the most important factors you need to take into consideration. Before you start any sort of transaction, make sure that you are familiar with all the words you can find in these regulations. Otherwise, you can have some problems in the future.
As you can see, there are a couple of things you need to be aware of when it comes to trading cryptos in India. Thankfully, the times of uncertainty have passed. Nowadays, the situation is clear. There are still some small aspects that need to be written in great detail. We don’t have any doubt it will be to the benefit of both traders and the government.