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Topic: Need some suggestions from senior members (Read 422 times)
2 Only send money to the exchange account (Zebpay, WazirX, etc) when you plan to sell the coins. Don't hold coins earned from bounties, etc on Exchange account where you have done KYC.
What about p2p trade? If I sell my coins to someone and get paid with paypal or directly to my Bank? Follow the same procedure for P2P as well even if you are using P2P platform without KYC. Send the campaign earnings from your personal wallet to P2P exchange only when you are planning to sell the coins. Don't hold your campaign earnings on P2P Exchanges. However, you can hold the coins which you have purchased with the bank balance because those are subject to capital gain.
2 Only send money to the exchange account (Zebpay, WazirX, etc) when you plan to sell the coins. Don't hold coins earned from bounties, etc on Exchange account where you have done KYC.
What about p2p trade? If I sell my coins to someone and get paid with paypal or directly to my Bank? Follow the same procedure for P2P as well even if you are using P2P platform without KYC. Send the campaign earnings from your personal wallet to P2P exchange only when you are planning to sell the coins. Don't hold your campaign earnings on P2P Exchanges. However, you can hold the coins which you have purchased with the bank balance because those are subject to capital gain.
2 Only send money to the exchange account (Zebpay, WazirX, etc) when you plan to sell the coins. Don't hold coins earned from bounties, etc on Exchange account where you have done KYC.
~snip~
Thank you for detailed explanation. Yes I know income frome bounty and airdrops are also taxable but my concerned is about source of this income. What can we describe as source of this income since we don't get any invoices etc.
It may be assumed that we are getting it from some illegal source or we are involved in money laundering etc. How can we safeguard ourselves from such possibilities?
Section 44AD and Section 44ADA is specially designed for small businessmen and professionals. According to the section 44ADA, if you show the profit more than 50% of your total receipts, you are discharged from maintaining books of accounts. So, for example, if you make Rs. 16,00,000 from bounties, campaigns, promotions, etc in a financial year. Then, you can simply say my profit from profession was Rs. 8,20,000 (more than 50%) and pay tax on this amount after taking deductions.
There are very less chances that Income Tax Department will poke you with notice if you are filing return under presumptive section (44ADA). But you need to take care of certain things:
1. Make sure you report the entire amount received in the bank account from bounty work as the income. (don't leave any)
2 Only send money to the exchange account (Zebpay, WazirX, etc) when you plan to sell the coins. Don't hold coins earned from bounties, etc on Exchange account where you have done KYC.
3. Don't, I repeat don't club profits made from trading of cryptocurrencies with bounty income. Show bounty income separately as 'professional income' and trading income as 'capital gain'.
If you can follow all these steps then you are good to go and needn't worry about invoices, etc. However, there are indirect taxes implications too if you are earning over Rs. 20,00,000 from these sources. If that's the case, tell me and I will explain that as well.
~snip~
What about income coming from selling BTC/alts earned through airdrops and bounty campaigns? All incomes are taxable so you have to pay tax on airdrops and bounty campaigns earnings too. Most of the members who earn through these mediums are also involved in some sort of campaigning for projects like signature or social media campaigning. I have talked to several CAs in my fraternity about this and it is general practice that they treat clients' income from these sort as 'Professional Income'. Although, section 44ADA which is meant for professionals doesn't specifically consider this work as profession but the section mentions this line:
"Other professions mentioned by the Central Board of Direct Taxes"
And CBDT mentioned 'Advertising' (code: 16006) as one of the professional income. Although, CBDT doesn't specifically explained which type of advertising but it is safe to assume that anything you earn by promoting crypto project is sort of an advertising and you are kind of professional who possess special skills for which projects pay you. So, in my views 44ADA is the best way to report such earnings. You should club your bounty earnings alongside all other forum and crypto earnings (except trading profits) and report it as professional income. Check out my this thread to learn how professional income is treated: https://bitcointalksearch.org/topic/guide-how-bitcoin-and-cryptocurrencies-are-taxed-in-india-5206607
Alternatively, if your amount is not much (less than Rs. 50,000), you can report it as income from other sources (freelancing income) like @pawanjain said.
What can we describe as source of this income since we don't get any invoices etc.
It may be assumed that we are getting it from some illegal source or we are involved in money laundering etc. How can we safeguard ourselves from such possibilities?
~snip~
What about income coming from selling BTC/alts earned through airdrops and bounty campaigns? All incomes are taxable so you have to pay tax on airdrops and bounty campaigns earnings too. Most of the members who earn through these mediums are also involved in some sort of campaigning for projects like signature or social media campaigning. I have talked to several CAs in my fraternity about this and it is general practice that they treat clients' income from these sort as 'Professional Income'. Although, section 44ADA which is meant for professionals doesn't specifically consider this work as profession but the section mentions this line:
"Other professions mentioned by the Central Board of Direct Taxes"
And CBDT mentioned 'Advertising' (code: 16006) as one of the professional income. Although, CBDT doesn't specifically explained which type of advertising but it is safe to assume that anything you earn by promoting crypto project is sort of an advertising and you are kind of professional who possess special skills for which projects pay you. So, in my views 44ADA is the best way to report such earnings. You should club your bounty earnings alongside all other forum and crypto earnings (except trading profits) and report it as professional income. Check out my this thread to learn how professional income is treated: https://bitcointalksearch.org/topic/guide-how-bitcoin-and-cryptocurrencies-are-taxed-in-india-5206607
Alternatively, if your amount is not much (less than Rs. 50,000), you can report it as income from other sources (freelancing income) like @pawanjain said.
What about income coming from selling BTC/alts earned through airdrops and bounty campaigns?
Even that is taxable. Every income from bitcoin whether it be from trading, airdrops, campaigns or by providing services is taxable.
I had recently filed Income Tax Return and had submitted my earnings as income from Freelancing (for campaign earnings)
They have separate section for income through trading. @Webtricks can provide a detailed information on which earnings can be filed under which section for tax.
Hello James,
Since you are not doing anything illegal, there is nothing to fear of. You are simply accepting a tech outsourcing project so taking payment in bitcoin shouldn't be the problem at all as long as you are paying tax on the income.
Since, you are receiving $6K per month, you will be covered both under income tax act as well as GST Act. Hence, you have to pay GST on services as well. Get GST number asap and deposit tax periodically after consulting with a CA.
I have a question for you, what is the legal status of your startup? Have you registered it as a company? If not, then you can't open corporate account on Zebpay or Giottus. Corporate accounts are only available for companies. If you have unregistered firm then it's better if you make an individual account on Zebpay (or any other exchange), sell your bitcoin proceeds on exchange, receive INR in your bank account, show INR receipts as your income, pay salaries out of your bank account, show salaries as your expense and pay income tax on net proceeds as business income.
And no need to worry about showing source of income. Just get a contract signed by you and the UK party detailing total project duration, total money receivable, fact that money will be received in bitcoin, etc.. Also regularly issue invoice to the UK Party. These all would be enough in case authorities inquire about your business.
What about income coming from selling BTC/alts earned through airdrops and bounty campaigns? Since you are not doing anything illegal, there is nothing to fear of. You are simply accepting a tech outsourcing project so taking payment in bitcoin shouldn't be the problem at all as long as you are paying tax on the income.
Since, you are receiving $6K per month, you will be covered both under income tax act as well as GST Act. Hence, you have to pay GST on services as well. Get GST number asap and deposit tax periodically after consulting with a CA.
I have a question for you, what is the legal status of your startup? Have you registered it as a company? If not, then you can't open corporate account on Zebpay or Giottus. Corporate accounts are only available for companies. If you have unregistered firm then it's better if you make an individual account on Zebpay (or any other exchange), sell your bitcoin proceeds on exchange, receive INR in your bank account, show INR receipts as your income, pay salaries out of your bank account, show salaries as your expense and pay income tax on net proceeds as business income.
And no need to worry about showing source of income. Just get a contract signed by you and the UK party detailing total project duration, total money receivable, fact that money will be received in bitcoin, etc.. Also regularly issue invoice to the UK Party. These all would be enough in case authorities inquire about your business.
~snip~
Thank you webtricks for our reply,We are incorporated entity LLP, we can register as a corporate account in zebpay, i spoke with them they are ok with that , but my question is as client is not giving us an agreement , how can we prove that we got that bitcoins from another company and can raise invoice for that and pa tax , My CA is sating we need to show legal documents that we are working for that client and raise invoice for him to pay the tax .
Oh, your firm is LLP then yes, you can surely go for an exchange corporate account.
Your CA is right, as I said in the last paragraph, you need to enter into an agreement with your client. It doesn't have to be in any specific format. Just details like the project duration, the specifics of the project, consideration to be received and the fact that consideration will be paid in bitcoin. Type all these details in a text file, tell the client to sign the printed document with his name, scan the document and send that back to you. Then you sign on the same document and hold it as the proof. After that, issue taxable invoice to your client every month (with GST), pay GST to the government on the portal. If you are able to do these steps then there is nothing to worry.
You can proceed without the signed agreement as well because paying income tax and filing return don't require you to provide the agreement. But that would be risky thing to do. In case authorities make any query, you should have ready document with you to show. So I would suggest you to only proceed if client is ready to sign the contract.
Thank you webtricks, If getting agreement from client is the better option , we will get to get that first
~snip~
Thank you webtricks for our reply,We are incorporated entity LLP, we can register as a corporate account in zebpay, i spoke with them they are ok with that , but my question is as client is not giving us an agreement , how can we prove that we got that bitcoins from another company and can raise invoice for that and pa tax , My CA is sating we need to show legal documents that we are working for that client and raise invoice for him to pay the tax .
Oh, your firm is LLP then yes, you can surely go for an exchange corporate account.
Your CA is right, as I said in the last paragraph, you need to enter into an agreement with your client. It doesn't have to be in any specific format. Just details like the project duration, the specifics of the project, consideration to be received and the fact that consideration will be paid in bitcoin. Type all these details in a text file, tell the client to sign the printed document with his name, scan the document and send that back to you. Then you sign on the same document and hold it as the proof. After that, issue taxable invoice to your client every month (with GST), pay GST to the government on the portal. If you are able to do these steps then there is nothing to worry.
You can proceed without the signed agreement as well because paying income tax and filing return don't require you to provide the agreement. But that would be risky thing to do. In case authorities make any query, you should have ready document with you to show. So I would suggest you to only proceed if client is ready to sign the contract.
Hello James,
Since you are not doing anything illegal, there is nothing to fear of. You are simply accepting a tech outsourcing project so taking payment in bitcoin shouldn't be the problem at all as long as you are paying tax on the income.
Since, you are receiving $6K per month, you will be covered both under income tax act as well as GST Act. Hence, you have to pay GST on services as well. Get GST number asap and deposit tax periodically after consulting with a CA.
I have a question for you, what is the legal status of your startup? Have you registered it as a company? If not, then you can't open corporate account on Zebpay or Giottus. Corporate accounts are only available for companies. If you have unregistered firm then it's better if you make an individual account on Zebpay (or any other exchange), sell your bitcoin proceeds on exchange, receive INR in your bank account, show INR receipts as your income, pay salaries out of your bank account, show salaries as your expense and pay income tax on net proceeds as business income.
And no need to worry about showing source of income. Just get a contract signed by you and the UK party detailing total project duration, total money receivable, fact that money will be received in bitcoin, etc.. Also regularly issue invoice to the UK Party. These all would be enough in case authorities inquire about your business.
Thank you webtricks for our reply,Since you are not doing anything illegal, there is nothing to fear of. You are simply accepting a tech outsourcing project so taking payment in bitcoin shouldn't be the problem at all as long as you are paying tax on the income.
Since, you are receiving $6K per month, you will be covered both under income tax act as well as GST Act. Hence, you have to pay GST on services as well. Get GST number asap and deposit tax periodically after consulting with a CA.
I have a question for you, what is the legal status of your startup? Have you registered it as a company? If not, then you can't open corporate account on Zebpay or Giottus. Corporate accounts are only available for companies. If you have unregistered firm then it's better if you make an individual account on Zebpay (or any other exchange), sell your bitcoin proceeds on exchange, receive INR in your bank account, show INR receipts as your income, pay salaries out of your bank account, show salaries as your expense and pay income tax on net proceeds as business income.
And no need to worry about showing source of income. Just get a contract signed by you and the UK party detailing total project duration, total money receivable, fact that money will be received in bitcoin, etc.. Also regularly issue invoice to the UK Party. These all would be enough in case authorities inquire about your business.
We are incorporated entity LLP, we can register as a corporate account in zebpay, i spoke with them they are ok with that , but my question is as client is not giving us an agreement , how can we prove that we got that bitcoins from another company and can raise invoice for that and pa tax , My CA is sating we need to show legal documents that we are working for that client and raise invoice for him to pay the tax .
Hello James,
Since you are not doing anything illegal, there is nothing to fear of. You are simply accepting a tech outsourcing project so taking payment in bitcoin shouldn't be the problem at all as long as you are paying tax on the income.
Since, you are receiving $6K per month, you will be covered both under income tax act as well as GST Act. Hence, you have to pay GST on services as well. Get GST number asap and deposit tax periodically after consulting with a CA.
I have a question for you, what is the legal status of your startup? Have you registered it as a company? If not, then you can't open corporate account on Zebpay or Giottus. Corporate accounts are only available for companies. If you have unregistered firm then it's better if you make an individual account on Zebpay (or any other exchange), sell your bitcoin proceeds on exchange, receive INR in your bank account, show INR receipts as your income, pay salaries out of your bank account, show salaries as your expense and pay income tax on net proceeds as business income.
And no need to worry about showing source of income. Just get a contract signed by you and the UK party detailing total project duration, total money receivable, fact that money will be received in bitcoin, etc.. Also regularly issue invoice to the UK Party. These all would be enough in case authorities inquire about your business.
Since you are not doing anything illegal, there is nothing to fear of. You are simply accepting a tech outsourcing project so taking payment in bitcoin shouldn't be the problem at all as long as you are paying tax on the income.
Since, you are receiving $6K per month, you will be covered both under income tax act as well as GST Act. Hence, you have to pay GST on services as well. Get GST number asap and deposit tax periodically after consulting with a CA.
I have a question for you, what is the legal status of your startup? Have you registered it as a company? If not, then you can't open corporate account on Zebpay or Giottus. Corporate accounts are only available for companies. If you have unregistered firm then it's better if you make an individual account on Zebpay (or any other exchange), sell your bitcoin proceeds on exchange, receive INR in your bank account, show INR receipts as your income, pay salaries out of your bank account, show salaries as your expense and pay income tax on net proceeds as business income.
And no need to worry about showing source of income. Just get a contract signed by you and the UK party detailing total project duration, total money receivable, fact that money will be received in bitcoin, etc.. Also regularly issue invoice to the UK Party. These all would be enough in case authorities inquire about your business.
Hello , I own a small tech startup with 10 employees.
we recently got a project from UK based client which is maintaining a Ecommerce project , As it has some user data and they has DPR rules, the client is saying he cannot do a NDA with m company in india and pay through Wire(i dont believe it though thats not the proper reason , but he dont want to pay via wire) . Instead he offered me the pay via BTC approx. 6K USD per month.
Here comes m problem , i have to pay salaries to m employees in via bank account , so i have to sell btc locally , exchanges like zebpay or Giotus is accepting corporate accounts , but it may create some problems in future as we can show the source of income .
Senior members please give some suggestions on how to handle this , i cant leave this opportunity at stake of 10 employees , after covid it was very tough to get projects .
Thanks in Advance
we recently got a project from UK based client which is maintaining a Ecommerce project , As it has some user data and they has DPR rules, the client is saying he cannot do a NDA with m company in india and pay through Wire(i dont believe it though thats not the proper reason , but he dont want to pay via wire) . Instead he offered me the pay via BTC approx. 6K USD per month.
Here comes m problem , i have to pay salaries to m employees in via bank account , so i have to sell btc locally , exchanges like zebpay or Giotus is accepting corporate accounts , but it may create some problems in future as we can show the source of income .
Senior members please give some suggestions on how to handle this , i cant leave this opportunity at stake of 10 employees , after covid it was very tough to get projects .
Thanks in Advance
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