Cryptocurrencies such as Bitcoins have seen a burgeoning fan following as far as investors are concerned in India in 2018. It behoves one to keep oneself updated on what plans the government has to tax capital gains accrued on Bitcoins investment.
Cryptocurrencies, Bitcoins and Capital Gains Tax in India – 2018
In the Union Budget 2018 speech, finance minister Arun Jaitley said, “The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”
It is the first time that a Union Budget speech spoke on cryptocurrencies and blockchain technology. This indicates that the government is now focused on applying regulations on cryptocurrencies like Bitcoins, Ethereum, etc.
Even though the government is taking a cautious stance on these financial instruments, it is bolstering the use of blockchain. Although, the virtual currency industry believes that blockchain and virtual money have to work in tandem.
Sushil Chandra, chairman of the Central Board of Direct Taxes (CBDT), has said that Income Tax Department has issued around one lakh notices to people who have invested in capital assets such as bitcoins, ethereum, etc.
The I-T Department had organized surveys at bitcoin exchanges across India in December last year. These surveys were to confirm the identity of traders and investors involved, transactions made between them, and the bank accounts used for this.
Bitcoin prices have been highly volatile in the past few months. The price of bitcoin peaked to reach $18,500 in December 2017 and since then the price has fallen to $8,500 in February 2018.
It is clearly mentioned by the government that cryptocurrencies are not legal tender. This means that they are not considered currencies. However, it doesn’t mean that holding a cryptocurrency such as Ripple or Ethereum is illegal or banned.
As of now, AllIndiaITR does not recommend investing in bitcoin or other cryptocurrencies. In case you have earned a profit on selling such assets, you should provide these details while filing your income tax return.