is it legal to accept bitcoins in india

legendster

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Quote from: sambiohazard on January 30, 2015, 10:12:45 AM

@polynesia

Thanks for your answers.

I think all the problems will be solved if they just declare BTC legal tender as INR is. Don't fight it, just accept it. Tongue

But the problem is, that it isnt a tender, its a currency, if it ever got accepted as a tender it would be very difficult for people to get used the idea of using it as a currency.

sambiohazard

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@polynesia

Thanks for your answers.

I think all the problems will be solved if they just declare BTC legal tender as INR is. Don't fight it, just accept it. Tongue

Corenin

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i don't think india has any law related to bitcoin or cryptocurrencies
so officially they are neither allow nor banned

polynesia

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Quote from: Benson Samuel on January 29, 2015, 04:32:48 AM

What happens with services?
Lets say I get 10 BTC today for some work worth approx 150K INR.
What happens if I do not wish to convert it at all?

You still have to pay tax on the income of 150K INR. Taxes will have to be paid in INR.

Quote from: Benson Samuel on January 29, 2015, 04:32:48 AM

Where are the taxes sorted, if all my vendors all accept BTC itself? If I get salt to steel with it, where does conversion come in?

These are barter transactions and gains (ie market value of BTC on the day you purchase salt, less the market value of BTC on the day you purchased them - either by paying fiat or providing services) would be taxed as capital gains.

Quote from: Benson Samuel on January 29, 2015, 04:32:48 AM

However, If I were to pay taxes, they would have to be in Bitcoin correct?

Taxes will have to be paid in INR, whether you receive payment in the form of bitcoins, gold coins, sodexho coupons or thirupathi laddoos.

Quote from: Benson Samuel on January 29, 2015, 04:32:48 AM

What happens if the value of BTC that is being held after taxes rises?
So, if my 150K INR - 45k INR tax becomes 1050K INR, what happens there?

If the value of BTC rises and you hold it, there are no tax implications. When you sell it or purchase goods with it, you will have to pay capital gains tax.

Here is an interesting article on bitcoin taxation.
http://www.livemint.com/Money/3qcKrBcAMIisahVOyOygYK/Are-bitcoins-currency-or-asset.html

The article talks about indirect taxes as well, making my head spin. Grin

sgk

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Quote from: Benson Samuel on January 29, 2015, 04:32:48 AM

-snip-
Its a very tough problem for any tax authorities to solve.

And that's why there are still no regulations or tax filing guidelines from government!

If the government wants everyone to file taxes on their Bitcoin transactions, all such minor details need to be accounted for and addressed, so it will take considerable amount of time for authorities to come up with a system that works. Until then, we're the masters of our own and can choose to do what we please.

My best suggestion would be to keep a proper detailed record of all your crypto transactions. In future if the authorities come to ask any questions, you should have everything to answer. Then let them decide what you should pay and what you shouldn't. You can clearly say that you didn't report it earlier because there were no certain guidelines.

stellar69

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Quote from: Benson Samuel on January 29, 2015, 04:32:48 AM

What happens with services?
Lets say I get 10 BTC today for some work worth approx 150K INR.
What happens if I do not wish to convert it at all?
Where are the taxes sorted, if all my vendors all accept BTC itself? If I get salt to steel with it, where does conversion come in?
However, If I were to pay taxes, they would have to be in Bitcoin correct? This would not be a viable option at the moment as there needs to be more time before Bitcoin can even be defined on a broad, iron clad manner.

What happens if the value of BTC that is being held after taxes rises?
So, if my 150K INR - 45k INR tax becomes 1050K INR, what happens there?

I think, the closest option is to declare the income on the minute of receipt and convert what needs to be paid into taxes only. Or pay taxes each time we convert or purchase something.
Its a very tough problem for any tax authorities to solve.

I am not an expert on tax matter. So can we accept 10s of bitcoins in services and then pay taxes on them in the form of INR?
Will the government punish us for using bitcoin?

Benson Samuel

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What happens with services?
Lets say I get 10 BTC today for some work worth approx 150K INR.
What happens if I do not wish to convert it at all?
Where are the taxes sorted, if all my vendors all accept BTC itself? If I get salt to steel with it, where does conversion come in?
However, If I were to pay taxes, they would have to be in Bitcoin correct? This would not be a viable option at the moment as there needs to be more time before Bitcoin can even be defined on a broad, iron clad manner.

What happens if the value of BTC that is being held after taxes rises?
So, if my 150K INR - 45k INR tax becomes 1050K INR, what happens there?

I think, the closest option is to declare the income on the minute of receipt and convert what needs to be paid into taxes only. Or pay taxes each time we convert or purchase something.
Its a very tough problem for any tax authorities to solve.

polynesia

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Quote from: sambiohazard on January 27, 2015, 05:38:17 AM

By gains on altcoins i mean if i increase my BTC by trading alts.
By your answer i understand that no one is yet sure what taxes are to be paid if we dont convert to INR, so i don't pay anything if i keep my BTC. Right?

If you make BTC gains (which translate into INR gains) by trading alts, technically you still have to pay taxes.
Taxes are applicable on barter transactions, which is what these trades would fall under.

For illustration purpose - You buy an altcoin for 1 BTC (Value on that day INR 18k) and sell it for 1.1 BTC (Value on that day INR 22K), you have made a gain of INR 4K, on which you will have to pay taxes. If you sell those 1.1 bitcoins for INR 22K at a later point in time, no taxes would be applicable.

Quote from: sambiohazard on January 27, 2015, 05:38:17 AM

BTW how do you calculate taxes if u buy other commodities/stocks but don't sell them for INR?

Same logic - when you sell them (for BTC or other commodities), taxes are applicable.

Quote from: sambiohazard on January 27, 2015, 05:38:17 AM

Also if i buy miners or risers using BTC what happens then?

It is consider liquidation of your BTC. If you had obtained BTC at a lower price, then capital gains tax would be applicable.

Disclaimer - Please consult your tax advisor before taking any decisions.

baristor

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It can be taxed tho only if u file ur papers and submit them for taxation,

If u dont show any proof of dealing with btc no 1 will care, but for people

Who are wanting to make mining or btc a steady income it will proly be important to reveal abit for tax purposes

sambiohazard

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Quote from: polynesia on January 25, 2015, 11:51:45 PM

Quote from: sambiohazard on January 25, 2015, 02:35:17 PM

How do I account for mining, faucets & tips from others?

Technically, they would be income from other sources.

Quote from: sambiohazard on January 25, 2015, 02:35:17 PM

Also if i make any gains on altcoins how to represent that?

By gains, do you mean profit on conversion to ruppees? If yes, capital gains tax would be applicable.

Quote from: sambiohazard on January 25, 2015, 02:35:17 PM

Is there any limit on capital gains tax? like you dont owe income tax for income upto INR 2lakh.

There is no limit on capital gains. Of course, you can still set off against capital losses.

Thanks for short and accurate answers

So, mining & tips etc will be taxed under income tax.

By gains on altcoins i mean if i increase my BTC by trading alts.
By your answer i understand that no one is yet sure what taxes are to be paid if we dont convert to INR, so i don't pay anything if i keep my BTC. Right?

BTW how do you calculate taxes if u buy other commodities/stocks but don't sell them for INR?

Also if i buy miners or risers using BTC what happens then?

Its all so unclear. I think RBI needs to say more than "We will integrate digital currencies in future." Angry

polynesia

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Quote from: Benson Samuel on January 26, 2015, 03:39:08 AM

Quote from: polynesia on January 26, 2015, 03:29:07 AM

Quote from: Benson Samuel on January 26, 2015, 01:04:41 AM

Quote from: baristor on January 26, 2015, 12:19:27 AM

as far as I know it is legal but can be taxed if u are earning income via bitcoin. the govnt so far hasnt made a firm stand on bitcoin , >.<

How can I pay my taxes in Bitcoin?
Am sure that the Indian Govt has not yet asked or mentioned anything about this as yet.
In fact, if they do, it would legitimize Bitcoin is a big way in India!

I doubt if this would ever happen.
Even though the government recognizes the USDs and EURs of the world, taxes still have to be paid in INR.
So even if BTC gains legitimacy and is recognized, the government would still want taxes to be paid in INR.

I think the ambiguity here is more for people who do not convert their BTC. What needs to be paid in that event?

If you have got your BTC by providing some service, convert it to INR at the prevailing exchange rate and report it under Income from Other sources. Let us say you earn 1 BTC, you would report income of INR 20,000.
If you decide to convert this BTC into INR at a later point of time, when the exchange rate is INR 18,000, you would be able to claim a capital loss of INR 2,000.

When in doubt while dealing with BTC, think of it as a 2 step process.
When you get BTC - Step 1) You receive INR. Step 2) You convert INR into BTC at the prevailing exchange rate.

Benson Samuel

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Landscaping Bitcoin for India!

Quote from: polynesia on January 26, 2015, 03:29:07 AM

Quote from: Benson Samuel on January 26, 2015, 01:04:41 AM

Quote from: baristor on January 26, 2015, 12:19:27 AM

as far as I know it is legal but can be taxed if u are earning income via bitcoin. the govnt so far hasnt made a firm stand on bitcoin , >.<

How can I pay my taxes in Bitcoin?
Am sure that the Indian Govt has not yet asked or mentioned anything about this as yet.
In fact, if they do, it would legitimize Bitcoin is a big way in India!

I doubt if this would ever happen.
Even though the government recognizes the USDs and EURs of the world, taxes still have to be paid in INR.
So even if BTC gains legitimacy and is recognized, the government would still want taxes to be paid in INR.

I think the ambiguity here is more for people who do not convert their BTC. What needs to be paid in that event?

polynesia

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Quote from: Benson Samuel on January 26, 2015, 01:04:41 AM

Quote from: baristor on January 26, 2015, 12:19:27 AM

as far as I know it is legal but can be taxed if u are earning income via bitcoin. the govnt so far hasnt made a firm stand on bitcoin , >.<

How can I pay my taxes in Bitcoin?
Am sure that the Indian Govt has not yet asked or mentioned anything about this as yet.
In fact, if they do, it would legitimize Bitcoin is a big way in India!

I doubt if this would ever happen.
Even though the government recognizes the USDs and EURs of the world, taxes still have to be paid in INR.
So even if BTC gains legitimacy and is recognized, the government would still want taxes to be paid in INR.

Benson Samuel

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Activity: 1890

Merit: 1000

Landscaping Bitcoin for India!

Quote from: baristor on January 26, 2015, 12:19:27 AM

as far as I know it is legal but can be taxed if u are earning income via bitcoin. the govnt so far hasnt made a firm stand on bitcoin , >.<

How can I pay my taxes in Bitcoin?
Am sure that the Indian Govt has not yet asked or mentioned anything about this as yet.
In fact, if they do, it would legitimize Bitcoin is a big way in India!

baristor

sr. member

Activity: 637

Merit: 262

as far as I know it is legal but can be taxed if u are earning income via bitcoin. the govnt so far hasnt made a firm stand on bitcoin , >.<

polynesia

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Quote from: sambiohazard on January 25, 2015, 02:35:17 PM

How do I account for mining, faucets & tips from others?

Technically, they would be income from other sources.

Quote from: sambiohazard on January 25, 2015, 02:35:17 PM

Also if i make any gains on altcoins how to represent that?

By gains, do you mean profit on conversion to ruppees? If yes, capital gains tax would be applicable.

Quote from: sambiohazard on January 25, 2015, 02:35:17 PM

Is there any limit on capital gains tax? like you dont owe income tax for income upto INR 2lakh.

There is no limit on capital gains. Of course, you can still set off against capital losses.

sambiohazard

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How do I account for mining, faucets & tips from others? Also if i make any gains on altcoins how to represent that?

Is there any limit on capital gains tax? like you dont owe income tax for income upto INR 2lakh.

polynesia

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Quote from: Fernandez on January 21, 2015, 02:30:06 AM

Since we are supposed to pay tax when price rises and we make a profit, wonder if I can write to the IT department asking for a donation since I lost due to the price crash Huh

If you have a cash loss, you can claim a capital loss and offset it against capital gains.

Fernandez

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Since we are supposed to pay tax when price rises and we make a profit, wonder if I can write to the IT department asking for a donation since I lost due to the price crash Huh

polynesia

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Quote from: sgk on January 20, 2015, 07:56:45 AM

Correct. It is more of a moral issue right now. If you want to report all your BTC income as regular income, you might want to pay tax on it.

But since RBI has no such guideline (how to calculate tax on Bitcoin income), you might just want to report only the amount you convert to fiat.

Having that said, it would be nice to have some guidelines from RBI or income tax department on how taxable BTC is and how much tax to pay.

I guess if you want to be totally accurate/honest, you have to calculate your BTC income based on the exchange rate on the day you receive BTCs.
You would then have capital gains/losses when you actually convert to fiat.

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