Initially, it seemed that people are hesitant to accept cryptocurrency as a medium of exchange. But post the corona economic picture has pushed consumers to think otherwise. The recent popularity and price hikes in the crypto world encouraged people to exploit the opportunity of earning great returns on investment (ROI). Although the digital currency business has grown, and profits are mounting. But still, a majority of crypto investors and crypto traders are worried about the tax mechanism and its implications on money earning via crypto trading.
The past three years are the most chaotic in Indian history in terms of economic meltdown. The repeated lockdowns and paramount inflation lured people away to go for the crypto-oriented currency. As per a couple of reports, more than 10 million Indians decided to invest in crypto during the first quarter of the financial year, 2021.
However, the complications remain the same. The Reserve Bank of India has not yet granted crypto-powered currencies such as Bitcoin a legal status. Since Bitcoin is not a legal entity of trade, investors are unsure about the tax mechanism regarding the money earned via crypto trading. It has given birth to the question of whether people will be able to use crypto wallets in exchange for legal goods?
Legal experts have tried to normalize the complications by stating that all sorts of profits earned by selling crypto assets are liable to levy of income tax, if not earned illegal crypto activity. For many customers, this statement up to some extent reduced the worries they had.
The regular income tax provisions argue that the implication of tax on crypto wallets will depend on the nature of the crypto investment.
Whether crypto wallets are owned in currency or in the form of assets, they will be taxed accordingly. The country’s tax experts explained f taxpayers decided to go for three years investment plan, they will fall in the category of short-term returns tax slab.
A vast majority of people who are excited to join crypto platforms in India have admitted that this taxation briefing has satisfied their concerns. However, some investors have suggested that they should declare income earned via crypto sales as money earned from other sources. In this way, they will be protected against financial misconduct charges, and they will also avoid the country’s complex taxation system.
Despite the diverse opinion of people, the matter is still in the government and financial task force’s hands. India as a country is drifting towards crypto trading rampantly. The burden of responsibility is on the government’s shoulders. They are responsible for transparency in crypto trading and save people against fraud.