Topic: Solutions on How to file Tax returns on Bitcoin Income - page 2. (Read 511 times)

There is no issue in filing it in other sources as of now. Even filing it under salary won't attract you any type of problem. But what I am trying to give is the best opinion so that you do not have to face any legal scrutiny in future. When you are rendering services such as signatures they become part of profession if you are not having any other business income. So filing it there would even allow you to take deduction of expenses and pay lesser tax. You can even take deduction of expenses under other source but that can lead to some scrutiny.

Remember there is no law as to how to file it so all of these are best judgement opinions. Alternative methods can be opted Obviously.

When I contacted an auditor regarding paying tax, she told me to consider the earnings from crypto as normal earnings( income from other sources) and pay tax according to that and last year I did the same. I didnt have any issue because of it.

Absolutely right that this benefit is only available to people notified U/S 44AA(1)
Yes this is what is written under 44AA(1) which says any other profession as notified by board in official gazette which has notified Information Technology Services. Signature campaign and digital marketing( The broad domain of bounty hunters) falls under this category.

Now your interpretation of 44ADA is horribly wrong. It only takes out the notified services from 44AA(1) not the clause of maintaining books of account, it contradictaly states that

Section 44ADA(4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

In layman terms this means that one who is not obeying 44ADA has to mantain books of accounts as prescribed by you here

And if we say that even people opting for 44ADA and 44AB have to maintain books of accounts then the whole presumptive income scheme becomes a joke.

Source: http://www.icnl.org/research/library/files/India/IndiaIncomeTax1961.pdf  

Alternatively showing it under other income sources may make such income more prone to scrutiny by Income Tax due to unclear disclosure while no one doubts on a digital marketing business that easily.

 
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,


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


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

So, I have seen a lot of people asking questions regarding the Taxability and disclosure requirements about their Bitcoin Income. As we all know the return filing date is coming. So I would suggest you with ways of disclosing your bitcoin or other cryptocurrencies Income earned in Financial year 2018-19.

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.


1. 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.

2. For Regular day trading profits.: If you are involved in regular trading of cryptocurrencies and have redeemed something in bank Account then you need to pay taxes on it. Remember don't Disclose this income under Capital Gains. You have to disclose this once again under profits and gains from Business but you can't opt for presumptive Income Scheme. Just ask your Accountant to make you a profit and Loss with Balance Sheet and file your return by paying tax at normal Slab Rates.

3. Earnings from Crypto Investing: If you have sold some crypto assets throughtout the year like merely 15-20 transactions with their profits its better you disclose such profits under Capital Gains. Remember you must have brought Cryptocurrencies using bank account to disclose income here. You can just show your sales Receipts minus the Purchase payment and pay tax on profit as short term capital gain.

4. Earnings from any other source: In general I don't think there is any other source of earning. Even if you have earned something from giveaways or something just show it under your income from other sources showing it as "CRYPTO RECEIPTS". Pay tax at normal slab rates.

I think I have covered all the major sources of crypto earnings. If you have any other query a PM is always welcome