Solutions on How to file Tax returns on Bitcoin Income

libert19

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Quote from: teosanru on November 17, 2019, 11:28:55 AM

Quote from: amishmanish on November 14, 2019, 11:41:25 PM

Quote from: teosanru on November 13, 2019, 02:07:48 PM

Quote from: akram143 on November 06, 2019, 03:12:01 PM

Quote from: teosanru on November 04, 2019, 10:05:39 AM

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. .

Then why individual bank accounts gets freezed when they find their account related to crypto purchasing? Most importantly people who trades on localbitcoin will face this issue when they receive a transaction with a remark related to cryptos or bitcoins.

Thousands of people do crypto purchase and sale everyday and more like 10-20 people get this issue, even I am one of those daily buyers and sellers but not even once I have faced an issue of freezing accounts. Moreover account freeze is not that much of an issue you just need to reach your branch and answer a few questions and Tadaaa account is back. You won't even get this issue if you have an account with Good Private Bank and have a good banking history. You think anybody reads the remarks of transactions?? So don't let social media fool you because the 10 who got this problem are the one's shouting around.

Some people on LBC expressly mention not to put crypto related remarks for the transaction. It maybe the case as teosanru pointed out that private banks mag not be keeping such a tab.
It'd be useful if you can share which banks you have been using that don't seem to have an issue with this. If a few other people have the same experiences, then these apprehensions about "banks freezing accounts on mention of crypto" can be put to rest.

I have personally used 4 such banks and never had any issue
1. HDFC Bank
2. ICICI Bank
3. Bank of India
4. Central Bank of India
Until now everything is smooth with these banks. But I would also point out that I am pretty regular customer of first two banks with current accounts too. They are private banks which are too dedicated to providing comfort to customer so they might have never freezed account due to such regularity with my Bank. But yes the other two are Public sector and I don't even have any major dealing with them yet everything is smooth. You can make your decisions accordingly.

some received letters from hdfc bank and got their account closed due to crypto transactions, I am not sure how they identified that those were crypto transactions though.

Iirc I saw this in indiabits group.

teosanru

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Quote from: amishmanish on November 14, 2019, 11:41:25 PM

Quote from: teosanru on November 13, 2019, 02:07:48 PM

Quote from: akram143 on November 06, 2019, 03:12:01 PM

Quote from: teosanru on November 04, 2019, 10:05:39 AM

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. .

Then why individual bank accounts gets freezed when they find their account related to crypto purchasing? Most importantly people who trades on localbitcoin will face this issue when they receive a transaction with a remark related to cryptos or bitcoins.

Thousands of people do crypto purchase and sale everyday and more like 10-20 people get this issue, even I am one of those daily buyers and sellers but not even once I have faced an issue of freezing accounts. Moreover account freeze is not that much of an issue you just need to reach your branch and answer a few questions and Tadaaa account is back. You won't even get this issue if you have an account with Good Private Bank and have a good banking history. You think anybody reads the remarks of transactions?? So don't let social media fool you because the 10 who got this problem are the one's shouting around.

Some people on LBC expressly mention not to put crypto related remarks for the transaction. It maybe the case as teosanru pointed out that private banks mag not be keeping such a tab.
It'd be useful if you can share which banks you have been using that don't seem to have an issue with this. If a few other people have the same experiences, then these apprehensions about "banks freezing accounts on mention of crypto" can be put to rest.

I have personally used 4 such banks and never had any issue
1. HDFC Bank
2. ICICI Bank
3. Bank of India
4. Central Bank of India
Until now everything is smooth with these banks. But I would also point out that I am pretty regular customer of first two banks with current accounts too. They are private banks which are too dedicated to providing comfort to customer so they might have never freezed account due to such regularity with my Bank. But yes the other two are Public sector and I don't even have any major dealing with them yet everything is smooth. You can make your decisions accordingly.

100bitcoin

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Quote from: TigerMart on November 15, 2019, 12:24:17 PM

Is this BTC -> Gift Card -> Product/Service a taxable event?

IMHO, 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. This should be true irrespective of the country you are residing in.

TigerMart

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Quote from: Virtual miner on May 21, 2019, 03:52:03 AM

Remember to save yourself from hazzles only pay taxes on cryptos which you have redeemed in Bank. Anything held on exchanges such as Koinex, Bitbns, WazirX still counts as crypto assets not sold. So you don't need to pay tax on that. Pay TAX on "₹" That you have received in your bank account only.

So, there are a list of sources as to how you can earn your bitcoin Income:
1. Earnings from Signature Campaigns, Bounties & other Services Rendered.
2. Earnings from Regular day trading profits.
3. Earnings from Crypto Investing(Crypto brought before 2018 but sold in 2018).
4. Earnings from any other source.

So, what if I earn Crypto in one or all of the ways listed above, 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?

amishmanish

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Quote from: teosanru on November 13, 2019, 02:07:48 PM

Quote from: akram143 on November 06, 2019, 03:12:01 PM

Quote from: teosanru on November 04, 2019, 10:05:39 AM

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. .

Then why individual bank accounts gets freezed when they find their account related to crypto purchasing? Most importantly people who trades on localbitcoin will face this issue when they receive a transaction with a remark related to cryptos or bitcoins.

Thousands of people do crypto purchase and sale everyday and more like 10-20 people get this issue, even I am one of those daily buyers and sellers but not even once I have faced an issue of freezing accounts. Moreover account freeze is not that much of an issue you just need to reach your branch and answer a few questions and Tadaaa account is back. You won't even get this issue if you have an account with Good Private Bank and have a good banking history. You think anybody reads the remarks of transactions?? So don't let social media fool you because the 10 who got this problem are the one's shouting around.

Some people on LBC expressly mention not to put crypto related remarks for the transaction. It maybe the case as teosanru pointed out that private banks mag not be keeping such a tab.
It'd be useful if you can share which banks you have been using that don't seem to have an issue with this. If a few other people have the same experiences, then these apprehensions about "banks freezing accounts on mention of crypto" can be put to rest.

teosanru

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Quote from: akram143 on November 06, 2019, 03:12:01 PM

Quote from: teosanru on November 04, 2019, 10:05:39 AM

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. .

Then why individual bank accounts gets freezed when they find their account related to crypto purchasing? Most importantly people who trades on localbitcoin will face this issue when they receive a transaction with a remark related to cryptos or bitcoins.

Thousands of people do crypto purchase and sale everyday and more like 10-20 people get this issue, even I am one of those daily buyers and sellers but not even once I have faced an issue of freezing accounts. Moreover account freeze is not that much of an issue you just need to reach your branch and answer a few questions and Tadaaa account is back. You won't even get this issue if you have an account with Good Private Bank and have a good banking history. You think anybody reads the remarks of transactions?? So don't let social media fool you because the 10 who got this problem are the one's shouting around.

webtricks

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Quote from: akram143 on November 06, 2019, 03:12:01 PM

Quote from: teosanru on November 04, 2019, 10:05:39 AM

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. .

Then why individual bank accounts gets freezed when they find their account related to crypto purchasing? Most importantly people who trades on localbitcoin will face this issue when they receive a transaction with a remark related to cryptos or bitcoins.

See every bank in India on its own discretion can freeze any account or block any transaction that bank considers as suspicious. It doesn't necessarily have to be prohibited by RBI. Let me give you an example, around 5 years ago I received $2 micro-payment from some source on my PayPal account. I had linked my Central Bank of India account with my PayPal and requested withdrawal to the same. However, my bank blocked the transaction on the ground of suspicion. Then PayPal sent me the Demand Draft of ₹80 all the way from US. Cheesy

After the incident above, I opened new account in HDFC Bank and linked that to PayPal. Till date, I never faced the same problem again and HDFC whole-heartily accepted all my foreign remittances to date.
So the actual problem is with the banks that the crypto traders using for trading purpose. Public sector banks are usually conservative towards risks associated with crypto transactions. I would recommend using HDFC, ICICI, Axis or Yes Bank for the above said purpose and you will never face the issue of account freezing ever.

akram143

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Quote from: teosanru on November 04, 2019, 10:05:39 AM

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. .

Then why individual bank accounts gets freezed when they find their account related to crypto purchasing? Most importantly people who trades on localbitcoin will face this issue when they receive a transaction with a remark related to cryptos or bitcoins.

teosanru

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Quote from: akram143 on November 03, 2019, 07:45:07 AM

Quote from: eaLiTy on November 02, 2019, 05:16:41 AM

Quote from: Stedsm on November 01, 2019, 08:38:42 AM

Does anyone of you guys know a reliable CA to get my taxes filed? I've got 2 CAs in contact but they don't know shit about BTC and what they know is all negative, so they speak the same

This is a problem you will face when you are approaching a CA who does not have any knowledge about BTCitcoin and all they know about is from the media and it is hard to make them understand, all you need to tell them is to file the income you earned from BTCitcoin as income from short term capital gains depending on the amount or you can file under income from other source, these depends upon the amount of money you are getting in your bank account, the rest i will explain in TG on how i filed the taxes so that you will get an idea on how to proceed.

But? When RBI issued ban on crypto related transactions,filing the taxes using the bank account statement might let us in the risk of getting account freezed right?

RBI never issued any ban on crypyo related transaction it just ordered it's banking system to close any transactions with crypto exchanges. Even if you are filing your tax return in Cryptocurrencies you don't need to expressly mention it anywhere in your return. Especially when you are filing it under other sources.

Quote from: avikz on November 03, 2019, 01:19:15 PM

Quote from: akram143 on November 03, 2019, 07:45:07 AM

Quote from: eaLiTy on November 02, 2019, 05:16:41 AM

Quote from: Stedsm on November 01, 2019, 08:38:42 AM

Does anyone of you guys know a reliable CA to get my taxes filed? I've got 2 CAs in contact but they don't know shit about BTC and what they know is all negative, so they speak the same

This is a problem you will face when you are approaching a CA who does not have any knowledge about BTCitcoin and all they know about is from the media and it is hard to make them understand, all you need to tell them is to file the income you earned from BTCitcoin as income from short term capital gains depending on the amount or you can file under income from other source, these depends upon the amount of money you are getting in your bank account, the rest i will explain in TG on how i filed the taxes so that you will get an idea on how to proceed.

But? When RBI issued ban on crypto related transactions,filing the taxes using the bank account statement might let us in the risk of getting account freezed right?

No! There is no provisions made in the tax return form to show your crypto earnings! So you can simply show your earnings as a freelancing income! There's no way to define your earning as crypto earning! This way, your account will not be freezed! Freelancers can earn through any path, it can be paypal, it can be moneygram or anything else! Doesn't really matter!

Yes moreover returns are not manually processed by any human. Even the assessment officer who is in charge of checking return doesn't bothers about your business or what. Only proper human intervention occurs if your return is selected for scrutiny. Which happens to only 0.5% of total filed returns each year.

avikz

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Quote from: akram143 on November 03, 2019, 07:45:07 AM

Quote from: eaLiTy on November 02, 2019, 05:16:41 AM

Quote from: Stedsm on November 01, 2019, 08:38:42 AM

Does anyone of you guys know a reliable CA to get my taxes filed? I've got 2 CAs in contact but they don't know shit about BTC and what they know is all negative, so they speak the same

This is a problem you will face when you are approaching a CA who does not have any knowledge about BTCitcoin and all they know about is from the media and it is hard to make them understand, all you need to tell them is to file the income you earned from BTCitcoin as income from short term capital gains depending on the amount or you can file under income from other source, these depends upon the amount of money you are getting in your bank account, the rest i will explain in TG on how i filed the taxes so that you will get an idea on how to proceed.

But? When RBI issued ban on crypto related transactions,filing the taxes using the bank account statement might let us in the risk of getting account freezed right?

No! There is no provisions made in the tax return form to show your crypto earnings! So you can simply show your earnings as a freelancing income! There's no way to define your earning as crypto earning! This way, your account will not be freezed! Freelancers can earn through any path, it can be paypal, it can be moneygram or anything else! Doesn't really matter!

akram143

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Quote from: eaLiTy on November 02, 2019, 05:16:41 AM

Quote from: Stedsm on November 01, 2019, 08:38:42 AM

Does anyone of you guys know a reliable CA to get my taxes filed? I've got 2 CAs in contact but they don't know shit about BTC and what they know is all negative, so they speak the same

This is a problem you will face when you are approaching a CA who does not have any knowledge about BTCitcoin and all they know about is from the media and it is hard to make them understand, all you need to tell them is to file the income you earned from BTCitcoin as income from short term capital gains depending on the amount or you can file under income from other source, these depends upon the amount of money you are getting in your bank account, the rest i will explain in TG on how i filed the taxes so that you will get an idea on how to proceed.

But? When RBI issued ban on crypto related transactions,filing the taxes using the bank account statement might let us in the risk of getting account freezed right?

sector-32

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This might help for your CA. https://cleartax.in/s/bitcoin-tax-calculator

eaLiTy

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Have Fun )@@( Stay Safe

Quote from: Stedsm on November 01, 2019, 08:38:42 AM

Does anyone of you guys know a reliable CA to get my taxes filed? I've got 2 CAs in contact but they don't know shit about BTC and what they know is all negative, so they speak the same

This is a problem you will face when you are approaching a CA who does not have any knowledge about BTCitcoin and all they know about is from the media and it is hard to make them understand, all you need to tell them is to file the income you earned from BTCitcoin as income from short term capital gains depending on the amount or you can file under income from other source, these depends upon the amount of money you are getting in your bank account, the rest i will explain in TG on how i filed the taxes so that you will get an idea on how to proceed.

Stedsm

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Does anyone of you guys know a reliable CA to get my taxes filed? I've got 2 CAs in contact but they don't know shit about BTC and what they know is all negative, so they speak the same - that ye ho jaega and wo ho jaega, jail ho jaegi, chhod do abhi ke abhi band kardo or kuch dusra kaam shuru kardo.

They try to scare people a lot based on what they know aur in CAs (Ch*tie Albelo) ko lagta hai ki ye Bhagwan hi ho gae BTC ke (limited to those 2 I'm talking about, to sab CA Dil pe mat le Lena). It's like these 2 guys - don't have the capacity to even chew popcorns in their mouth and talk like they can break walnuts under their @$$.

I know this is an old topic and was not touched since long, but this information is necessary for me at the moment, so to manage someone to keep my accounts.

webtricks

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Quote from: avikz on July 14, 2019, 10:54:40 AM

Quote from: playboy654 on July 12, 2019, 04:14:00 AM

Quote from: avikz on July 10, 2019, 12:47:47 PM

Quote from: playboy654 on July 10, 2019, 05:20:15 AM

It helps a lot,but I am not earning much of bitcoins and converting it into INR so still I need to pay income taxes?

If you have earned more than 2.5 lakh in the last financial year, you will have to file income tax return. This does not mean you will have to pay tax but you have to let the government know how much you have earned! But if your total income is less than 2.5 lakh, then you don't have to file the return as well!

Here total income means your bitcoin earnings plus your offline earnings! Hope this helps!

Ofcourse I got more than 2.5 lakhs but I thought it is only necessary to do when we hit 5 lakhs per annum.

That is for the current financial year! So next year you won't have to pay income tax if your income doesn't exceed 5 lakhs. But currently we are doing taxes for last financial year i.e. FY 18-19. So for this year, the old rules apply!

Also we don't yet know if we don't have to file income tax return or not for upto 5 laks income! It is possible that the rule for filing income tax return remains unchanged, only the tax burden will be calculated based on 5 lakhs!

The basic exemption limit is still Rs. 2,50,000. Government has increased rebate through Section 87A which provide additional deduction upto Rs. 12,500 from total tax liability if income is between Rs. 2,50,000 and Rs. 5,00,000. So yes, even if your tax liability is zero, you have to file nil return if your income is above Rs. 2,50,000. The exemption from filing return is only available if total income is below Rs. 2,50,000 for individual below the age of 60. If the age of individual is above 60 or 80 then the exemption limit is Rs. 3,00,000 and Rs. 5,00,000 respectively.

avikz

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Quote from: playboy654 on July 12, 2019, 04:14:00 AM

Quote from: avikz on July 10, 2019, 12:47:47 PM

Quote from: playboy654 on July 10, 2019, 05:20:15 AM

It helps a lot,but I am not earning much of bitcoins and converting it into INR so still I need to pay income taxes?

If you have earned more than 2.5 lakh in the last financial year, you will have to file income tax return. This does not mean you will have to pay tax but you have to let the government know how much you have earned! But if your total income is less than 2.5 lakh, then you don't have to file the return as well!

Here total income means your bitcoin earnings plus your offline earnings! Hope this helps!

Ofcourse I got more than 2.5 lakhs but I thought it is only necessary to do when we hit 5 lakhs per annum.

That is for the current financial year! So next year you won't have to pay income tax if your income doesn't exceed 5 lakhs. But currently we are doing taxes for last financial year i.e. FY 18-19. So for this year, the old rules apply!

Also we don't yet know if we don't have to file income tax return or not for upto 5 laks income! It is possible that the rule for filing income tax return remains unchanged, only the tax burden will be calculated based on 5 lakhs!

playboy654

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Quote from: avikz on July 10, 2019, 12:47:47 PM

Quote from: playboy654 on July 10, 2019, 05:20:15 AM

It helps a lot,but I am not earning much of bitcoins and converting it into INR so still I need to pay income taxes?

If you have earned more than 2.5 lakh in the last financial year, you will have to file income tax return. This does not mean you will have to pay tax but you have to let the government know how much you have earned! But if your total income is less than 2.5 lakh, then you don't have to file the return as well!

Here total income means your bitcoin earnings plus your offline earnings! Hope this helps!

Ofcourse I got more than 2.5 lakhs but I thought it is only necessary to do when we hit 5 lakhs per annum.

avikz

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Activity: 3024

Merit: 1496

Quote from: playboy654 on July 10, 2019, 05:20:15 AM

It helps a lot,but I am not earning much of bitcoins and converting it into INR so still I need to pay income taxes?

If you have earned more than 2.5 lakh in the last financial year, you will have to file income tax return. This does not mean you will have to pay tax but you have to let the government know how much you have earned! But if your total income is less than 2.5 lakh, then you don't have to file the return as well!

Here total income means your bitcoin earnings plus your offline earnings! Hope this helps!

playboy654

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Activity: 546

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It helps a lot,but I am not earning much of bitcoins and converting it into INR so still I need to pay income taxes?

avikz

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Quote from: avikz on May 21, 2019, 10:24:22 AM

Quote

For Bounty Hunters and Signature Campaigner: If you have earned any income from such sources and redeemed it on an Indian exchange. Its better if you show yourself as a Digital Marketing Agency and file your return under Profits and gains from Business. In this way you will be able to take advantage of "Presumptive Income Scheme" in which you can declare your total earnings and even subtract some expenses such as Internet Cost, Electricity cost etc. better ask your CA regarding it. So if you have earned received for eg. ₹200,000 in form of Receipts from signature campaigns you can deduct some expenses and file a return under 44ADA.

Section 44ADA of Indian Income tax act says that certain professionals as mentioned under section 44AA(1) will only have the benefit of declaring their income under section 44ADA. Now section 44AA(1) says,

Quote

(1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette' shall keep and maintain such books.

Now lets look at the books to be maintained to get the benefits of 44ADA -

Quote

– Cash book;
– Journal;
– Ledger;
– Carbon copies of the bills and receipts issued by the person in relation to sums exceeding Rs.25;
– Original bills and receipts issued to the person in respect of the expenditure incurred.

If an individual is earning from signature campaign, such books can't be maintained! It's best to show the income under "Income from other sources" and pay taxes accordingly!

Information source: https://studycafe.in/2013/07/section-44aa-persons-required-to-maintain-books-of-accounts.html

I am withdrawing the above quoted post! OP is absolutely correct! I just had a discussion with my CA regarding my tax filing this year and he suggested the same! I am going to file my crypto earnings under 40ADA this year! There are some major benefits as explained by my CA,

1. 40ADA is specifically mentioned for few professionals and freelancing is one of them.
2 Accounting not required
3. Straight away deduct 50% from your total earnings as expenses
4. Audit not required

Go ahead with 40ADA if you are earning in cryptos from freelancing or from signature campaigns.

Topic: Solutions on How to file Tax returns on Bitcoin Income (Read 511 times)