Topic: [GUIDE] How Bitcoin and Cryptocurrencies are taxed in India? (Read 17655 times)

IS 1% TDS on purchasing crypto and transferring to non custodial wallet applicable? or TDS is only applicable when you sell.

In Germany they are taxable. It doesnt matter which to which you convert. But if you make profits on #ShibaInu or #UkraInu if will be so big that you dont have to worry hopefully!

Hello BTT family,
What if bitcoin was legal in India?
When there is talk of cryptocurrency, how bitcoin can be excluded from the discussion. Right? As bitcoin has shown the entire world of investment that cryptocurrency can give high value return on investment. The highest ROI given by bitcoin in last 10 years than anyother project.
So if bitcoin becomes legal in India it could benefit everyone in the country like firstly the government. Government can make it legal or regularise so that it can earn from the tax which can help in economic growth and development of the country. Moreover India which in last 6 years has encouraged online transactions through UPI payments want to make aware of online transactions and which has been a great success. As government encourages online transactions next could be cryptocurrency. As I think so let's see. What you think about it?
Secondly India which has so much potential young youths in every field and sees opportunities in new sectors for growth. Bitcoin launching could provide a great opportunity for these young youths for there personal and financial growths.
Third is mining of bitcoin on a large scale should be encouraged with the help of renewable energy sources like wind, solar, hydro. This type of mining could increase in rise of new mining companies and which in return would provide good job opportunities.
This type of mining could control pollution also thus not harming our environment and this is good news for every one
So more jobs, new online transactions in form of cryptocurrency/ bitcoin, new companies, less pollution. Isn't this futuristic?
That's why I believe Bitcoin/cryptocurrency is future of our world.
Indian government do it fast don't be late on this.
Thanks guys for reading my views.
Was it good? I'm open to feedbacks  and discussion.

I've only entered into crypto very recently and had a question.

If I swap BTC or an altcoin for a stablecoin like USDT or USDC or DAI.

Is that swap considered a taxable event?

Or only If i convert that stablecoin into INR?

The reason I ask is I was listening to a podcast/interview recently and the person mentioned that even these conversions into stables is a taxable event. Of course he was talking about UK tax laws.

Any thoughts?

Nice Hard-Work, Webtricks

Well & very clearly explained, how to legalise Crypto Income.....
We have referred your topic in our thread.

That cleared a whole lotta doubts for me, thank you webtricks, really appreciate this. My notion regarding moving coins to secure wallets was that the exchanges ideally have the transaction history - wallet address that you're moving it to for HODLing and that they will share it with the concerned authorities so they tax you even when it's not converted to fiat, that they'll be able to identify who it is by investigating the blockchain leading to the wallet. It's cleared now, thank you once again.

Hey, welcome to the forum! I'm glad you liked the topic.


Yeah! This will be one time taxable event. You will only be liable to pay tax on the profit made i.e. the difference between the amount you withdraw from WazirX and the amount you sent to another person in P2P trade. If you are fine paying tax and only want to hold bitcoins then you don't even need P2P. You can purchase bitcoins via WazirX/Binance, send those to your private wallet and hold for as long as you want, no one will ask you a question. Transfer those btc back to Binance, sell and withdraw. It will still be one taxable event which can be short-term or long-term capital gain depending upon the holding period.


If you have done KYC on Binance then all of your crypto transactions are separate taxable events. Suppose, you buy BTC worth $5000 by depositing Rs. 3.75 lakh and sell it for $7000 on Binance few months later and buy ETH with the proceeds. Then, you sell ETH after few months for $10000. Then, finally withdraw Rs. 8 lakh to your bank. Here, you have made 2 taxable events:

1. Bitcoin buy/sell = Suppose, USD worth Rs. 76 on the day you sell btc. Then, your profit = 7000*76 - 3,75,000 = 5,32,000 - 3,75,000 = 1,57,000
2. Ether buy/sell = profit = 8,00,000 - 5,32,000 = 2,68,000

Another factor to consider here is the timing of the transactions. If all transactions are made in a single financial year then you can report all transactions as a single taxable event. Income Tax Act gives you option to report all your short-term capital gains from a single source as a single transaction. So, suppose you buy btc on 25th May, 2021 and sell it for eth on 29th Sep, 2021 and finally sell eth on 3rd Feb, 2022 and withdraw the final balance to bank on the same day then you can simply report the whole transaction as single-event in your income tax return as STCG:

Sale of cryptocurrencies:
Net Proceeds = 8,00,000
Purchase Price = 3,75,000
Profit = 4,25,000

But imagine that from the above example, you don't sell eth on 3rd Feb, 2022. Instead, you sell it on 15th April, 2022. Now, this transaction becomes the taxable event of Financial Year 2022-23. So, you have to report the profit on btc sale of Rs. 1,57,000 in Financial Year 2021-22 (even if you haven't withdrawn any money to the bank) and the profit on eth of Rs. 2,68,000 in Financial Year 2022-23 as two separate events.

Hope this clears some things for you. You are welcome to ask more doubts.
And the most important thing: Government can (may) bring strict guidelines for the crypto transactions anytime with a law. Whatever, I have written above and in this topic may become entirely irrelevant if government decides to specifically provides rules for crypto transactions. Let's see how it rolls. For the time being, this is the best way you can report your crypto transactions, pay tax and remain outside the radar of authorities.

First of all thank you webtricks for all that gold information. Crypto Noob here so hoping you can clear some of my doubts regarding this. Recently got into bitcoin and got myself registered on wazirx and binance to buy bitcoin and HODL, unfortunately I KYC'd on both and connected both the accounts. After doing some research on tax and other things, I realised it's better to buy it P2P, please correct me If I'm wrong here.

You mentioned that ""Since bitcoin has no legal/illegal status in India, you don't have to pay tax on keeping/holding bitcoin. You may have 0.001 or 100 BTC in your wallet but no tax to be levied as far as amount is kept in the form of Bitcoin. Bitcoin is currently considered at par with securities such as shares for taxation purpose." and  "Whenever you convert your crypto holding to Indian Rupee and you have made some profit/income, you have to pay tax"

So the question is if I'm planning to buy bitcoin via P2P, transfer it to my wallet and HODL for as long as I want and then when I want to sell it, transfer it to binance, convert BTC > USDT and then transfer it to wazirx and convert USDT > INR and withdraw it what will be the implications? will it be a one time taxable event? what is better way to approach this if I'm HODLing? should I resort to buying through exchanges? (I'm worried about the new cryptocurrency ban in India)

Also "Number One: You receive $5000 worth BTC in private wallet (such as MyCelium or Electrum) and then you send BTC to Crypto-to-Crypto Exchange where you haven't done KYC like Binance. Then you exchange ETH to BTC on Binance. Finally, you send those ETH to exchange like WazirX and convert those to INR."

Q. in the above case If KYC has been done with binance then how to proceed?

sorry for these noob questions, hope you can answer them, thanks.

Hey Rahul,

Government hasn't announced the GST guidelines for the trading of cryptocurrencies yet. In the absence of any guideline, I consider 'trading of cryptocurrencies' equivalent to the 'trading of shares/securities'. As per GST law, shares and securities are not included in the definition of 'Goods'. So going by the definition of 'Goods', trading of cryptocurrencies for time being doesn't come under the purview of GST. Hence, you needn't pay and file GST returns for your buy/sell transactions even though your turnover is above Rs. 40 lakh.

The only cases when you are required to pay GST is when you are carrying professional or normal business and making taxable supply in excess to Rs. 20 lakh and 40 lakh respectively and receiving payments in bitcoins.

I am a new trader of BTC with a turnover of 1 lakh daily , which would make the turnover around 4 crores yearly , which obviously comes under the purview of GST .

But my question is ,since we do not receive any INPUT on our BTC purchase , its literally impossible to pay any GST on the sale of BTC .

The point of paying tax on the income of this trading is clear , but what should I do regarding GST and taxes ??

Sorry for the late reply. Yes! 'Other professional services' sounds fine if you are filing under the section 44ADA. But few days ago, me and teosanru were having discussion on this topic. Although most of the CAs suggest to go for 44ADA but thinking from pure technical view, 44AD is more appropriate. 44AD unlike 44ADA, is a general presumptive income scheme and covers all type of businesses. I have few clients who receive crypto incomes. I have scheduled the filing of their income tax returns in October. So, I will once again study everything in deep next month and try to figure out best possible way to report crypto income and then update the details in this thread as well.

As far as nature of business is concerned, the following two are most appropriate depending upon which type of income forms bigger part of your total income:
Engineering and technical consultancy - 16005
Other Software consultancy - 14002

Do you know any online CA's that are reputed and can help one file a return? I would try cleartax but I still think that it requires a bit of information and don't want to end up doing something which I later regret. Also, what nature of business does freelancing comes under if you were to file your return using 44ADA? Do you think '16019 – Other professional services n.e.c.' would be okay?

Thanks for the wonderful knowledge. That is seriously a great information for anyone who is looking to start crypto trading and looking to pay tax legally in india.
I have pmed you regarding some doubts. I hope you don't mind. 

This is a major issue generally faced by all the traders even those who trade on stock exchanges. Now my Opinion would be based on my Understanding of the Tax Laws and it's application with the current legal scenario of Bitcoin. It will be well backed by provisions so you definitely can make a case using it. So:

INCOME TAX
1. For stock traders there is a case law by Supreme Court where they determined that turnover of Intraday/derivative traders is to be calculated in a different manner.  Irrespective of how much you brought or sold. This is the manner of calculation:

 (i)You calculate profit/loss you had each day after squaring off the position.
 (ii)Total up all your profits and losses, by taking losses as positive. For Eg. these were your profits/:
          Profit/Loss             Turnover
Day 1:  ₹50000- Profit         50000
Day 2:  ₹40000-Profit          40000
Day 3:  ₹(30000)-Loss         30000
Day 4:  ₹(30000)-Loss         30000
Day 5:   NIL                        NIL
Day 6:  ₹20000-profit          20000
Total:   ₹50000-Profit          170000

Therefore your turnover was 1,70,000 while profit was 50k.

Pay Income Tax on 50k Accordingly and check applicability of Tax Audit according to Turnover calculated in this manner. You won't find this anywhere in the Income Tax Act/ Rules but Supreme court upheld this in case of F&O and is a very widely accepted practice for people who do F&O. But remember this was upheld by SC in that because they were of the opinion that no actual delivery took place. Same might not be accepted in case your AO is adamant in considering bitcoin a commodity rather than a Security. In such a case you might need to sum up the amount of Bitcoin you sell everyday. No matter if it reaches 21 Crores(considering 5-6 lakhs everyday). in such a case you might even need to get Books of accounts audited by a Chartered Accountant. But I would prefer you to go with the first option in my Opinion Supreme court did classify cryptocurrencies as Virtual "Currency"

GST

This is a much tedious issue than Income tax. if you consider Bitcoin as a "security" then it's exempt from GST hence no GST is chargeable. But definition of securities are to be read from securities from  Securities Contracts (Regulation) Act, 1956 which states securities include:
Now as you can see bitcoin isn't a security so GST is definitely applicable. Once again issues comes upon Turnover which as per me should be calculated in a similar fashion. So take GST number only when your sales exceed 20 Lakhs.

Registration as firm
Practically there is no registration for a sole proprietor except if required under GST. But so far I don't think you need any separate firm or something. Just open a separate bank account, current account is advisable not at all mandatory(You might need letter head/CA Certificate for current account). Make transactions from this account only.

This answer is based on examination of bare facts that you have presented to me. I would prefer if you PM me in case you need specific assistance with specific facts as interpretation might change in those circumstances.

First of all thanks for the great insight. 
I do have some doubts regarding crypro trading which I think you might have answers.
I want to start trading bitcoin on p2p website like paxful and lbc.
My projection is that my daily turnover would be 5-6 Lakh INR.
So is it better to start proprietorship firm and do transaction in the name of firm? If yes would I need to register for GST number?
So would I need current account for this much transaction?

Thanks.
 

Great thanks for adding.


Another important doubt here.


you said all the transactions will be paid as regular income of the year under normal slab but can we mention these transactions in the itr file returns......... or how to mention this income source............?


Thanks!

Right! I have updated FAQ, here is the excerpt of the same:

Ok you mean if we get the free lance income in bitcoins then if i convert to any other cryptos and that cryptos conveted to INR later will be treated as normal bracket right i mean we no need to pay capital gains rather we should pay regular taxes on the income right......?


Please update this line in your FAQ's there are many people having this doubt that they are thinking that it is also treated as capital gains but it is treated as normal tax as you said i request to please update the FAQ's thanks!


Thanks!

If I am understanding correctly then you are saying that you received $5000 as your freelancing fees and then you invested that income in other coin, say ETH, right? Now read the details below carefully. I hope it will help you.

See in this situation, theoretically there are two taxable events arising:

• First when you received freelancer payment, you made the income of $5000 hence tax is payable on $5000.
• Second when you bought ETH, you are now investing as an investor. Imagine you sold ETH for $5500. So any profit you made over and above $5000 i.e. $500 will be taxable as capital gains.
  

This should be correct taxable treatment for your case:

• Suppose exchange rate was $1 = ₹78  on the day when you received freelancer payment. Hence, your income will be 5000*78 = ₹3,90,000. So tax as per normal bracket is payable on ₹3,90,000
• Suppose exchange rate was $1 = ₹75 when you finally sold the ETH. Hence, your profit on investment will be (5500*75) - (5000*78) = ₹22,500. So tax as per capital gains is payable on ₹22,500.

---

The above treatment I described is as per normal currency i.e. fiat currency i.e. INR or USD. However, we are dealing here with more complex issue i.e. cryptocurrency. So overall, we can eliminate first taxable event if we like as we are dealing in cryptocurrencies. Consider the following two situations:

Number One: You receive $5000 worth BTC in private wallet (such as MyCelium or Electrum) and then you send BTC to Crypto-to-Crypto Exchange where you haven't done KYC like Binance. Then you exchange ETH to BTC on Binance. Finally, you send those ETH to exchange like WazirX and convert those to INR.

Number Two: You receive $5000 worth BTC in Exchange wallet like WazirX directly. There you convert BTC to ETH and keep ETH on WazirX as well. Finally you sell ETH on WazirX for INR.

Now note: In case of 'Number Two' situation, you have to follow the treatment I described in first half of my post. You should consider your whole trade as two taxable events because you have done KYC with WazirX and they have record of your all transactions. But in case of 'Number One' situation, your first taxable event is completely anonymous so rather than showing whole trade as two taxable events, you can simply show the final conversion i.e. selling ETH for INR as you income and pay tax as per normal bracket on 5500*75 = ₹4,12,500. No need to show capital gain transaction at all.

I hope it clears most of your doubts.

Hey Vijay,
Thanks for your questions.

You don't have to pay taxes if you sold BTC for Tether (USDT). USDT also comes under the bracket of cryptocurrencies. Only income which you withdraw to bank is taxable.

For second question, it's up to you. Generally crypto-to-crypto transactions are not traceable so if you did crypto/crypto trade on exchange where you haven't done KYC and it is separate exchange from the one where you convert crypto to INR then you can consider $5000 as your purchase value and pay tax on Sell Amount less $5000. Alternatively, it is up to you if you wanna show two transactions. One bought for $5000 and sold for $3000. Other bought for $4000 and sold for $20000. But since second buying is not from your bank, I would advise you to go with first option and show whole trade as single transaction.

But what about taxes on conversions.......?


I mean if sold btc for tether i mean i hold coins like stable coins is those taxable or only income tranfered to the bank is taxable......?



I have another doubt if i brought btc for $5000 sold btc and hold some usd coins for example btc sold for $3000 and converted to usdt and hold stable coins for 6 months.




And brought btc for $4000 and sold for $20000 and which  brought price should i show should i show $4000 or $5000....?



Thanks!

You said

" But I strongly suggest you all to not spend Bitcoins directly for buying expensive assets like house and cars. Since status of Bitcoin is still not clear, you may land in big trouble if Income Tax Department tracks your transaction, it may be considered as money laundering. So always withdraw amount to bank first, pay tax if applicable and then spend on whatever you like."


I have invested in bitcoins through bank balance and next i will sell via and transfer money to bank and i will pay tax and i will buy house.... right?


You mean we can't directly buy house with bitcoin? if it is right please edit your article with more detail.

Thanks!

Hey Guys,

What crypto tax software you guys use?

If not sure check a list of crypto tax softwares here. (https://coincodecap.com/category/accounting-and-tax)

1. Though Amazon does not directly accept Bitcoin or cryptocurrencies as a payment option, you can still use BTC & a few other alts to buy Amazon gift card from Bitrefill and use them on Amazon.

2. Great to have a CA among us.

Yes. You don't have to pay tax if you are just holding Bitcoins. Tax is charged on income but buying Bitcoin doesn't generate any income. Income will be generated when you will sell the Bitcoins for profit. Thus the event will be taxable in the year when you will sell your holdings and make some profits. Make sure to show it as capital gains whenever you sell it.

Consider this image for further reference:

No, you are not required to file the return if your income is below 2,50,000. However, some people still like to file return even if they have income below minimum limit because Income Tax Return is most concrete evidence of your income. It may come handy if you have to submit income proof required for some documentation, say applying for Visa or Passport.
But still you have complete autonomy to choose if you want to file return or not.


Glad, you liked it! Hope Bitcoin won't be banned in India.

What if we apply this scenario on all the cases? What I mean is, what if someone is earning income in crypto through freelancing/salary/trading/etc. but at the end of the year their total income from all that is under the taxation limit (which is 2,50,000 if I am not mistaken). Do they still have to file return?

By the way, thank you for doing this. This information is very important and a positive step towards legalization of crypto in India.

See in my opinion and in opinion of a general person obviously this is taxable because Income Tax officers are not stupid to realize this simple transaction of not converting btc to fiat and directly purchasing to evade tax. You will obviously be scrutinized. But as I said due to lack of any concrete law or precedent in this case judgement of the tribunal would be binding and would serve as a precedent for future judgement. Best you can do is try to not get caught by not doing any KYC on such platforms.

As I mentioned Contract act says that anything received in return of pursuance of services is consideration. For example even a future promise to pay is consideration. For example: If you sell something and other person promises to pay in future. Even this transactions is taxable and he would be your debtor.
100Bitcoin example was altogether hypothetical. I don't know which fairy world he is talking about because such transactions hardly take place on major levels. Transactions involving Barter would never be on profit because it would mean other person's loss.

However a hypothetical situation requires a hypothetical answer with real Solution:

In case of Barter taxability is determined in a complicated way using fair market values. For example: Assume there are two persons A & B. Both are in business of RICE & WHEAT Respectively. A producing rice whose fair market value is Rs. 50/kg and B producing wheat whose fair market value is 40/kg.

Now A goes to B and they agree that A would give 4 kg rice in return of 5 kg Wheat. Now in such case A's sale of goods would be Rs. 200 Taxable on basis of Fair Market Value and B's sale of goods would be Rs.200 too taxable based on fair market value. Because both are purchasing it for consumption for personal purposes they cannot claim it as an expense. So whole income is taxable.

But if both are not involved in business of Wheat and rice then these are merely gifts about which I have already talked here:  

PS:
1. Meanwhile we are debating so much regarding the issue. I don't think as of now Amazon is even accepting Bitcoin or cryptocurrencies as payment options. Once it starts accepting governments would make some laws about it too so we can definitely rest assured regarding it.
2. I am a CA

Using Amazon Pay we can do a hell lot of things in India. From grocery shopping to medicine to transport all can be done through Amazon Pay. But, Amazon Pay limits a verified user to use 1L INR worth of Gift card per year. So, will this 1L INR per year, in the form of gift card, be taxable if all these utilities are availed?

Moreover, from your detailed post, it seems like you are either a CA or a very knowledgeable person regarding taxation. So, can you please tell me whether barter is a taxable event in India? For example, if I exchange rice for wheat, like the example cited by 100bitcoin, does this very event attract taxation any way?

First of all if you are considering it as a professional income under 44ADA make sure the receipts don't increase more than 20lakhs because that would bring you under purview of gst. If this happens try showing this income on any other member of your family by receiving the fiat in his account to avoid unnecessary 18% or 6%(composition) GST.
Your example is wrong. Actually tax is a very vast subject and these things take place everyday due to difference interpretation of law. Which is why tribunals exist. Thing is bitcoin cannot be considered money. It cannot even be considered an asset. So it is just barter.
No you don't, because the INR you used to buy gift card was already taxed when you received it.
Well income tax is payable on gifts received in cash or kind. You know technically you have to pay tax on this gift card received if the amount of total gift cards/gifts exceeds ₹50000/- in an year. Read section 56 of the income tax act. Gift card is just like a cash equivalent. Therefore it would be a taxable gift.
But in this scenario, things are a bit technical. As there was no payment such payment option on such sites except fiat there is no specific law on it. Moreover considering the minute amount involved like recharge, bills etc. I doubt there would be any law on it. But, if things go in higher amounts be ready to face additions to income and try finding a valid precedent as to why you haven't paid tax on it.

It's funny because If we go by your suggestion i would consider my whole bitcoin income as gift because it's not money i can consider just like rice because there is no law on it. how come is this idea??

As per the contract act anything received as in pursuance of any service is consideration which might even not be cash. So your AO will definitely make this consideration taxable.

But why we don't see such things happening around with farmers and all is because people below 2.5 lacs Don't file returns and for people with income more than 2.5 lacs such things are pretty minute. Also not to forget agricultural income is exempt.

I'm sorry to disagree with you in this regard. This should not be a taxable event. Here is why...

Do you pay income tax while buying a Gift Card with INR? - NO

Do you pay income tax while buying a Product/Service with Gift Card you received as a gift? - NO

Then, why would you pay any tax in this case? I guess, you should not.

I dont think this example represents the gift card analogy. Cash is a legal tender and hence a taxable instrument. So, getting salary on cash is definitely taxable. But, say if you are a farmer working on a field farming rice. Land owner pays you in 10Kg rice every month. You go to other farmers with 5Kg rice and exchange it with wheat. Do you need to pay tax anywhere for acquiring this 5kg rice and 5kg wheat?

That's what I included in my answer in the last. When you using bitcoins to pay for utility, it means you are transferring value of money to the seller. You can only transfer value to someone when you possess it. So yeah, when you convert bitcoins to amazon balance, the amount becomes your income at that very point becuase Amazon balance is valued in INR.

This is something similar to say, I am getting my salary in cash. I spend it directly on my utility and never paid tax assuming IT Dep. will never know that I am getting any salary. However, one can easily track down my spendings by looking through my expenditures (which are on my name). Same happens when you spend btc for utility.

What if I earn BTC through signature campaign and alt coin trading, but never sale to get it to my bank account. Instead, if I buy gift cards and use them. For example, Amazon Pay gift card can be used to recharge mobile phone, pay electricity bill etc. Is this BTC -> Gift Card -> Product/Service a taxable event?

You may be receiving salary in Bitcoin either from local business or foreign business. If local business is paying you salary in Bitcoins, there can be two possibilities - business claims same as expense in its books or it doesn't show salary paid as expense. The treatment done by business will directly impact your treatment. In case business claims salary paid as expense, it has to pay ESI/PF (if applicable) and deduct TDS (if applicable). If business does so, you too have to file income as 'Income under the head Salary'. Calculate tax applicable as per basic slabs and minus TDS deducted by your employer. In ninety nine percent cases, you tax payable will come 0 and you just have to file nil return if you don't have any other income.
If your employer doesn't claim salary paid as expense or you receive salary from foreign employer, don't file the income under the head Salary. Rather treat the same as freelancing treatment. I will discuss this in detail in few seconds.

Well, this case covers me and most of the members here. You may be receiving signature payments, campaign management payments, ambassador payments, social media payments and what not. Just remember one thing - this is your freelancing income and you are professional. You have to show it as Technical Consultancy/Marketing business under 'Profit and gains from business and profession'. This way you can take advantage of Section 44ADA of Income Tax. Section states that you don't have to maintain any record or books. Just consider your total receipts and pay tax on minimum 50% of your receipts.
Example: I withdrew Rs. 10,00,000 during the financial year in my bank. Then I will show Rs. 10,00,000 as receipts from my consultancy business. As per Section 44ADA, I have to show my profits to be Rs. 5,00,000 or more (52-55% recommended), let say I show profit to be Rs. 5,20,000. Then I have to pay tax on Rs. 5,20,000 which will be around Rs. 14,000 or zero if I claim deductions of Rs. 20,000 or more (such as LIC premium paid, etc.).

So the largest portion of Indians associated with Bitcoins are those who invest in Bitcoins. You purchase Bitcoins from your bank, sell those, make profits and withdraw that to bank. Now investors can be of two types - Core Investors or Traders. Core Investors occasionally buy/sell Bitcoins, let's say I bought Bitcoins 8 times during last financial year and sold 4 times. Whereas traders are those who are continuously buying/selling Bitcoins, say 5-10 times in a day. If you are core investors - show your profits under the head Capital Gains. It can be long-term or short-term depending upon your holding duration. In case your made loss (when you bought high and sold for less), you need not pay tax. However, you have to file return with nil tax.
If you are trader, better show your profits under the head Profit and Gains from Business and Profession as calculating capital gains on such large number of transactions will be very tedious. So what you have to do, prepare your account books, treat all your buy transactions as purchases, treat all sell transactions as sales, you can also claim expenses like electricity, accounting charges, depreciation on laptops/mobiles, internet charges, etc. Ascertain your final profit and pay tax on the same as per basic slabs.




Q1. I am already in employment or a government employee, am I allowed to show my signature earnings as profit from business?
Ans. Yes! Since you are showing your earnings as freelancing income, there is no restriction on that. Most of the MNCs and government allow employees to do sideway freelancing business  or be a dormant (non-active) partner in partnership firm.

Q2. I bought Bitcoin from my bank balance, sold it for profit then bought Ethereum for Bitcoin and sold Eth at loss and withdrew money to bank. Do I have to pay tax?
Ans. You actually did two capital gain transactions here. First, selling Bitcoins. Second, selling Ethereum. Suppose you bought 1 BTC for Rs. 5,00,000 and sold it for Rs. 6,00,000. Then bought 30 ETH for Rs. 6,00,000 and sold those for Rs. 5,50,000. Now you made Capital gain on first transaction of Rs. 1,00,000 and Capital Loss of Rs. 50,000 on second transaction. So you have to pay tax on net capital gain i.e. 1,00,000 - 50,000 = Rs. 50,000.

Q3. I have received freelancing income in Bitcoin and then I bought altcoins with bitcoin. Later I sold altcoins for profit, how should I treat my income in return?
Ans. Theoretically, you have made two taxable events - one when you received income in bitcoin and second when you sold altcoins for profit. But due to anonymous nature of cryptocurrency, you can treat all transactions as single taxable event and pay tax on the final amount withdrawn to bank as per normal tax slab. Read this post for more details: https://bitcointalksearch.org/topic/m.54447056