Topic: Signature Campaign earnings and GST | People please pay attention! (Read 387 times)

Useful article for those who have not asked the question of taxation. When I was actively engaged in trading, I tried to understand how the tax payment system works, but I still did not understand the payment procedure. maybe someone has already dealt with such declarations and can describe the process in detail?

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.

Useful article for those who have not asked the question of taxation. When I was actively engaged in trading, I tried to understand how the tax payment system works, but I still did not understand the payment procedure. maybe someone has already dealt with such declarations and can describe the process in detail?

Hello,

After reading this I had a doubt, we pay taxes, I agree. But only for transactions done in fiat right ?

Everything we do with our bank account is monitored by the RBI and we are questionable and taxable for the same. They are also freezing our bank accounts for being involved in crypto trading. How do they expect us to give them data of something like this when they themselves don't support it.

Also, am I taxable if I just store my BTC as it is ? Like, I sold a service, got paid, I never cashed it out : I just want it to remain as it is in my wallet.

You are not paying taxes for your transactions, you are just need to pay taxes for your earnings basically the income.And taxes are not monitored by RBI so your tax reports will not be going to the bank related offices so you no need to worry about it.

As long as you are not converting your bitcoins into fiat then there is no need of reporting it to tax.

44ADA is your answer here! It is freelancing income slot and you can very well declare your signature campaign earning under this slot. With 44ADA, you don't need to maintain a book and you can also claim certain expenses as business development charges which will be deducted from your earning.

Not my word, it's from a reputed CA whose service I am using since last two years. You don't need to pay GST and you don't need any sort of company registration.

But definitely don't show your crypto signature campaign earnings under "income from other sources". If the amount is significant, you can get a scrutiny letter.

Hello,

After reading this I had a doubt, we pay taxes, I agree. But only for transactions done in fiat right ?

Everything we do with our bank account is monitored by the RBI and we are questionable and taxable for the same. They are also freezing our bank accounts for being involved in crypto trading. How do they expect us to give them data of something like this when they themselves don't support it.

Also, am I taxable if I just store my BTC as it is ? Like, I sold a service, got paid, I never cashed it out : I just want it to remain as it is in my wallet.

plz elaborate me the signature earning..

plz elaborate me the signature earning..

44ADA is your answer here! It is freelancing income slot and you can very well declare your signature campaign earning under this slot. With 44ADA, you don't need to maintain a book and you can also claim certain expenses as business development charges which will be deducted from your earning.

Not my word, it's from a reputed CA whose service I am using since last two years. You don't need to pay GST and you don't need any sort of company registration.

But definitely don't show your crypto signature campaign earnings under "income from other sources". If the amount is significant, you can get a scrutiny letter.

Professionals engaged in the following professions are eligible:
Interior decorations
Technical consulting
Engineering
Accounting
Legal
Medical
Architecture
Other professionals, as mentioned below:
a. Movie artists includes a producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers
b. Authorised representative means a person who represents another person for a fee before a tribunal or any authority constituted under any law. It does not include an employee of the person so represented or a person who is carrying on the profession of accountancy
c. Any other notified professionals:  Company Secretary, Information Technology, Authorised Representative, Film Artist

I am not well versed with tax calculations but I have a doubt here
How will you define that the place of supply is outside India.

It's a global community and cryptocurrencies are operated globally (within and outside India).
So doesn't it hinder the regulation because in a way the supply is ALSO in India.

Correct me if I am wrong.

“Supply of goods or service or both –

(a) when the supplier is located in India and the place of supply is outside India;….. ”

Shall be treated to be a supply of goods or service or both in the course of inter-state trade or commerce.”