India's Crypto Economy
India's Crypto Economy is a brand-new weekly newsletter (delivered every Thursday) from Inc42 to help you decode the rapidly growing crypto economy and its implications on business, work and life. We launched this newsletter on the 4th anniversary of our weekly series “Crypto This Week” which completed 190 editions in May, 2021.
Every year, as the date for filing Income Tax Returns (ITR) for the fiscal year 2019-20 (FY20) approaches, crypto investors are left puzzled. While the Indian government hasn’t laid out clear guidelines for crypto investors to declare their earnings, most Indian crypto exchanges advise their customers to declare their crypto earnings, classifying the same as “Income from Other Sources”.
If reports are to be believed, the government, taking notice of the ongoing Bitcoin bull run, with the price of the leading cryptocurrency having touched an all-time high of $19,850.11 last month, is planning to actively tax crypto investors this year.
The date for filing ITR for FY20 is December 31, 2020.
According to an ET report, India’s Income Tax Department is tracking investors who are making money from cryptocurrencies this year and could demand taxes of as much as 30% on the gains made through crypto.
“ZebPay has told our members since 2014 that the tax laws always apply to crypto earnings. We advise our customers to declare their income and be compliant,” Vikram Rangala, Chief Marketing Officer, ZebPay, told Inc42.
It is worth noting that Bitcoin’s active trading could be treated as a speculative business and attract normal tax rates. As such, crypto investors are being advised to classify their crypto earnings as capital gains, associated with stocks.
Infrequent crypto transactions could be treated as long or short-term capital gains, depending on the holding period. India’s tax authorities haven’t yet categorised returns from cryptocurrencies under any specific bracket.
Sumit Gupta, cofounder and CEO of Mumbai-headquartered crypto exchange CoinDCX said crypto earnings come under “income from other sources”.
“While cryptocurrencies have not been categorised under any tax bracket, the Indian tax department can monitor earnings of cryptocurrency investors that are registered through KYC/AML compliant exchanges like CoinDCX, through their national identity documents such as PAN.”
“The fact that earnings from cryptocurrencies are being considered as taxable income is a positive indication as it also implies crypto is being considered as a potential asset class,” he added.
By the time of writing, Bitcoin was trading at $18,880, a 4.4% decline from last week’s price of $19,750. Its market cap was around $349 Bn.
Ethereum was trading at $575, an 8.14% decline from last week’s price of $626. Its market cap was around $65 Bn.
Facebook Hopes To Launch Its Crypto And Wallet In 2021, Top Exec Says
David Marcus, the head of Facebook Financial, or F2, said that both cryptocurrency Diem and related crypto wallet Novi could be launched next year. Speaking at the Singapore Fintech Festival 2020 on December 8, he stated that regulators should finally let Facebook move forward with its cryptocurrency. You can read the full Cointelegraph story here.
Lawsuit Threatened Over Facebook’s Libra Rebrand Plan
Facebook has been hit with threats of legal action over its plan to rebrand the Libra stablecoin project to ‘Diem’ from a finance application of the same name.
Facebook announced its plan to rebrand Libra on Dec. 1, with the firm claiming the new name would help the revamped project distance itself from the intense regulatory pushback faced by Libra when it was announced last year. You can read the full Cointelegraph story here.