Topic: Planned Indian law on Bitcoin may give exit window to investors (Read 151 times)

Hi there, I have presented a detailed fact-based article on this topic in this thread: https://bitcointalksearch.org/topic/guide-on-crypto-banprohibition-in-india-so-far-only-facts-and-press-releases-5339221.

Let me know your thoughts on this article. I hope you find this useful.

I have been hearing about India banning Crypto for literally years now. Can someone at least post official government source when they do report such news? instead of some gossip news headlines spreading fear among potential investors and businessmen? I honestly dont think India was ever planing to ban crypto. They were just studying and learning about crypto and that was about it. Newspapers spread fear amongst Indian community and has actually taken India lagging behind on crypto revolution by years.

I'm glad that you found it useful. In relation to your query, I have practically seen tax officers chase for suspicious credits of INR 1 lakh or more in a single transaction. If it is split up in various months, the risk reduces substantially. However, do note that tax officers also collect the information from Bankers on what is the aggregate amount of credits in your bank account. For eg. if you get INR 50,000 every month, you'll have a cumulative credits of INR 6 lakhs in a year. This would then be compared against the total receipts (i.e. income before deducting expenses, in case of businesses such as freelancing). If your receipts declared in ITR is greater than the credits in bank account, the chance of getting picked for assessment reduces substantially.

Further, regarding your last line, do you mean to say that your crypto income was not disclosed in the return of income? If that is the case, only if the tax officers pick your case for assessment and are able to get that information, they might ask you to pay taxes on it with interest and penalties. However, if the taxes that you have already paid is more than 90% of the taxes that you would have to pay on full income, then it is very less likely to attract any interest or penalty.

Needless to say, if you have already disclosed a large amount of income as taxable when compared to your bank credits, then you may not even have to worry about being picked for assessment.

In relation to the topic of exit window to investors (if a ban is proposed), if the amount of gain you have at the time of disposing your crypto holdings is fully offered to income tax, there should not be any worry. However, if there is a substantial dip (around 20%) in the income offered in the very next year, you maybe questioned/picked for assessment for the income of the next year. The tax offices are using data analytics techniques to identify variations in the income offered versus various data gathered through GST filings, Bank statements, TDS deductions etc. and if the variation is very less (less than 20%), it is likely to get ignored.

Lastly, in recent years I have seen a trend of individuals not being picked for assessment and your case shouldn't be picked as well in the normal circumstances. Also, in my personal view, Indian government may not impose a ban on cryptocurrencies and have written down various grounds to challenge such a ban, if imposed, in this article: https://bitcointalksearch.org/topic/challenging-a-ban-on-crypto-through-writpil-5334398

Hope this helps. Thank you.

Thank you for this detailed explanation. I would like to know what amount would be consider huge to attract tax men attention?
No I haven't done anything illegal and I always file my ITR on time.
Though I never mentioned crypto in my returns I show all income earned as freelancer.

I have a doubt here, are you telling that the income tax department can seek and recover taxes up to the last three years if you are escaping taxation below 50 Lakhs and if no one contacted you in the past three years regarding that then there is nothing much to worry as long as the amount is 50 Lakhs ?.
I am an NRI and hence i am not filing any taxes for over a decade and i have no idea about the taxation in India and the new rules.

You would have to worry if your redemption amount in one particular financial year is huge. This is because your bank is required to report any huge financial transaction or suspicious transactions to the government. Further, if a ban is imposed, government is likely going to take the information from exchanges (in India, at least) on your cryptocurrency transactions and take the details of redemption of any amount to your bank account from such exchanges.

Having said this, you need to worry only if you have done something illegal with cryptocurrency or have failed to pay taxes on your cryptocurrency income. If you have only participated in signature campaigns and your income is below the minimum threshold for taxation, you have absolutely nothing to worry about. The limit for taxation has been Rs. 5 lakhs for the past 3 years.

Further, in relation to getting the info on all the transactions, kindly note that the income tax department can seek information and recover taxes only up to last 3 years (as amended in Finance Act, 2021) if income that is escaping taxation is below Rs. 50 lakhs. Only if the income escaping taxation is above Rs. 50 lakhs the income tax department can seek information up to 10 years.

I hope you have been compliant with the laws and filed your taxes (if required to do so) and hence do not face any trouble. However, if there is any concern, feel free to let me know. I would be happy to help you out in a legal and ethical manner.

 

But most if us have participated in so many campaigns over past these years. It is impossible to keep track of all of them.
Also as you know how crypto trade works. We buy sell buy sell so many times that it is such a tedious job to get all that info.

Apparently yes if you receive a good amount of money during the exit window. So you will have to justify the source of the money and how you have earned them. It can be signature campaign or bounty rewards or even the gain from trading. So start tracking everything so that you can provide all information whenever needed. If possible, start converting your crypto holdings into cash asap. Because once the ban is announced, it will be hard to find traders in p2p exchanges. It's better to be safe than sorry.

Yes Friend, it’s true traders will find any way to trade.

Actually crypto trading is one kind of dabba trading.
Traders are not showing actual earning and paying tax to Govt.
Due to that reason they Indian Govt is trying to ban crypto trading.

From my experience (since I'm from a tax background and have a fair legal knowledge as well), the government is likely to come up with a scheme similar to Black Money Act, whereby those holding cryptocurrencies will have an opportunity to dispose of the cryptocurrencies they hold and offer the gains to tax along with a certain amount as regularization fees or penalty. While this does have a lot of issues while implementing, for examples what in the case of wallets that have a micro amount of crypto and are unable to dispose of the balance due to high transaction cost? What in the case of paper wallets where the private key is stored offline? etc.

However, due to recent push from crypto participants and also certain crypto funds being set up to help in COVID related support, we could see a change in the approach of the government towards a more favorable outlook towards crypto (or at least I hope so).

Further, I have separately written on how we can challenge the ban on cryptocurrencies from a legal perspective in this blog: https://bitcointalksearch.org/topic/challenging-a-ban-on-crypto-through-writpil-5334398

Hope you find this insightful.

The fun part is even the government has no idea on how to conduct things when it comes to cryptocurrency and so is the reason we are hearing conflicting news all the time. For the past two days i am getting news updates in my phone regarding exit window and a couple of days ago all the updates  was about regulations and how it will change the world  .

The Central government was more than happy to chest bump and PR work rather than taking things seriously and even exporting the vaccines when they are not able to provide to its own people. I am actually stuck in a ship and i was supposed to reach home by now and with the recent surge i cannot move from here as well which is really disappointing.

That's a harsh reality bro. But the thing is, it's not just about the government or politics or their inefficiency but it's about everything.
People talk about something one and a few days later they just forget about it and move on to different topics.
This was what happened with SSR case also but lets not get diverted. Let's see how the Indian Government handles the crypto ban decision.
I personally think they will just be silent with this regard and let it keep going as it is for now.

You know what the worse part is? We all gonna forget this Incompetency soon once this wave is over. We will again see marketing campaigns to portrait our leadership as mass savers and Messiah.
Fools going to forget and forgive them for some sentimental issues.
Those who lost their dear ones will be silenced. I fear what would happen if, God forbid, we will get 3rd wave next year.
3rd mutation of virus going to be more lethal.

Yeah man, to be honest, I am very disappointed with the Indian Government right now. At first I though it had handled the covid situation not badly but the recent days have shown their incompetence and the same goes with their plan to ban cryptocurrencies. I think even if the government decides to ban crypto there will still be many Indians trading it in some or the other way.
Also, banning crypto won't do any good to either ones and the government would instead be benefited if they had just regulated crypto at first place.

Yes they are incompetent but still some idiots vote for them. If they don't get clear majority, they buy the legislators.
Mark my word, after west Bengal results, BJP will go for big horse trading. Anyway that's entirely a different topic.
As far as crypto is concerned, even dictatorial regimes like China is not coming heavily on crytpo investors.

The government asked companies to provide their cryptocurrency investments details but i have not heard the government asking individuals to provide their asset details.

The central government is inefficient in even providing oxygen as everyone here is aware of and the level of bad governance is highlighted during these hard times and i do not think they will do anything meaningful and make things better for the cryptocurrency investors by forcing us to stop using them according to our choice and they will shove their centralized shit.

Planned Indian law on Bitcoin may give exit window to investors, may lead to probe in past transactions
The Indian government may soon come with a law which is likely to ban all cryptocurrencies, may look into past transactions but, will provide investors with a window to exit from their holdings.

What do the mean by probe in past transactions? Does it means we will have to provide them all details of our trades and bounty rewards too?