The Government of India Ministry of Electronics and Information Technology (MeitY), January 2021 has released National Level Strategy on Blockchain two days before yesterday. Indian cryptocurrency enthusiasts searching for a new crypto asset like LPN TOKEN are now waiting for the government’s take on cryptocurrency. They will get to know about it during the second week of March 2021.
Crypto investors in India need to know about one more key thing. You can credit the Indian government’s decision to introduce Cryptocurrency and Regulation of Official Digital Currency Bill 2021.
Reading this post till the end will guide you about the Indian government’s possible tax collection policy related to your income from activities in the domain of cryptocurrency.
Before coming to the point, Indian cryptocurrency enthusiasts looking for an opportunity to invest in a new crypto asset to invest in like LPN TOKEN need to learn about the Income Tax Department of India and the way it works.
About The Income Tax Department India:
- For this purpose, the Central Government of India has a policy, department and process to levy, administer, collect and recover income tax. This process and department is specifically governed by the Income Tax 1961.
- CBDT (Central Board of Direct Taxes) heads and governs the Income Tax Department of India.
- Income Tax Department of Indian is a part of MFDR (The Ministry of Finance’s Department of Revenue).
- The income Tax Department of India is responsible for collecting taxes directly.
Coming to the point, Indian Tax Authorities do not seem to have released any clear directive related to the following:
- The taxation of cryptocurrencies.
- The taxation of activities related to mining, staking, forking and airdrops.
According to some of the financial experts, cryptocurrency acquired through mining should be considered a self-acquired asset. Such assets fall in the category of Self-Acquired Capital Asset.
Self-Acquired Capital Asset is considered taxable as Capital Gains under section 45 of the ITA (Income Tax Act).
Those who are searching for a new crypto asset to invest in must know about COA as well. COA stands for the Cost of Acquisition. According to some tax experts, refer to section 55 of the Income Tax Act for determining the Cost of Acquisition.
Cryptocurrencies are not within the ambit of section 55 of the ITA (Income Tax Act). Therefore, the Cost of Acquisition could not be determined to levy CGT (Capital Gains Tax) on income from cryptocurrencies.
Your education about Income tax on earning from decentralized digital currencies does not end here only. Everything you have learned about it through this post is merely the tip of the iceberg.
Wait for the next post of this series to learn more about it.
Key Note For Everyone:
You are not advised to trust any single word presented in this post blindly. We value your trust in us. This is the reason we advise you to be wise and do some research about it on your own as well. The purpose of this post is only to educate you about it. Only you are responsible for your profit, loss, actions or decisions.