Tax on Cryptocurrency

Hello Community,

I have a query regarding investments in cryptocurrencies.

I'm a freelancer and my earnings are less than 2.5 lakh per annum, therefore I'm not required to file ITR. I wish to invest my savings in cryptocurrency.

Suppose I invest in the year 2020 and withdraw my investments in 2022, how will the taxations be processed?

Please let me know your thoughts.

Thanks in advance :)

 

Replies (7)
Quick Summary
This discussion addresses cryptocurrency taxation for freelancers in India. If your annual income is below ₹2.5 lakh, you may not need to file an Income Tax Return (ITR) currently. However, any profits made from selling cryptocurrency investments will be subject to capital gains tax. You will need to file an ITR in the year you realise these gains, especially if your total income, including crypto profits, exceeds the taxable threshold.

With reference to Section 2(14) of the Income-tax, Act 1961, cryptocurrency could be deemed as capital assets if they are purchased for the purpose of investments by the taxpayers and any gain arising on transfer of such cryptocurrency shall be taxable as capital gains. Its further classification into short-term or long-term capital gain would depend upon the period of holding of cryptocurrency. If they are held for more than 36 months from the date of purchase, it will be considered as long-term capital asset, otherwise a short-term capital asset. Short-term capital gains are taxable as per the slab rates applicable to a taxpayer. And long-term capital gains are taxed at the flat rate of 20% with the benefit of indexation. However, if the transactions in cryptocurrency are substantial and frequent, it could be held that the taxpayer is trading in cryptocurrency. In this case, income from sale of cryptocurrency would be taxable as business income.
Https://coincrunch.in/2019/01/08/income-tax-cryptocurrency-india/
Https://cleartax.in/s/bitcoins-taxes-india

Thank you so much for your revert sir. Really appreciate it.

Just one more thing, since i do not file an ITR now as my Income is less than 2.5 lac. Suppose I sell my investments make capital gains by 2022 and file an ITR in that year so will it be fine ? Or do I have to file an ITR this year to show that i i have made investments in Crypto?

You need to show any gain and loss in the year of receipt of crypto currency. Not required to file ITR Now.

 

Hello, 

Iam a seller on Flipkart from Delhi (Gst is also registered from Delhi) and wish to send my products to Flipkart's warehouse in Bangalore and Kolkata ( since I'm eligible to send products to these Warehouses). However, I'm unable to list these Warehouses in my gst portal. Can you please help me as to how should I proceed?

 

Hi! As a freelancer earning below ₹2.5 lakh annually, you're currently below the taxable income threshold, so technically you aren't required to file an ITR. However, once you start investing and making gains from crypto — especially if you withdraw with profit — those gains may be considered taxable under capital gains in India. If your total income including crypto gains exceeds the threshold, you’ll be required to file taxes accordingly. Also, keep in mind that TDS may apply when withdrawing from certain platforms.

If you're looking for a reliable way to get started, here’s a useful guide on how to open an account with Exness, a platform many traders trust. It's beginner-friendly and offers transparent processes.

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