Many investors around the World invested heavily in Cryptocurrency, especially Bitcoins. India was not far behind, as many citizens invested in Bitcoins. Tech-savvy citizens invested in Bitcoins to make quick money and tax evaders invested to hide black money.
As illegal money and laundered cash poured into Bitcoins, their value soared. The value of a Bitcoin was $600-$630 in the July-September 2016 period. Within a year and a few months, its value was nearly $20,000.
In recent times the value of Bitcoins and other Cryptocurrency has fallen. FM Arun Jaitley has said, Bitcoins and other Cryptocurrencies are not legal tender and the Government will take steps to eliminate Cryptocurrency use in financing illegal activities.
RBI has banned Bitcoins and other virtual currencies. RBI has also warned banks to thoroughly scrutinize, financial transaction by Companies and exchanges involved in the trading of crypto currencies.
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Bitcoins are a very bad and dangerous investment. Bitcoins do not enjoy the stability of a currency like US Dollar, Euro, Rupee or the Yen. Bitcoins are not regulated by any Central Bank like the RBI. Bitcoins and Cryptocurrencies have no regulator. If you lose your money, there's no one to complain to.
1. RBI has banned banks from dealing in cryptocurrencies
RBI has banned banks/mobile wallets from dealing with or providing services to individuals/business entities, who are into buying and selling of cryptocurrencies. Investors in Bitcoins who had no place to hide, rushed to sell off their Bitcoins. They called up their tax advisors, seeking advice on how to pay tax on Bitcoin gains from FY 2017-18. Investors want to pay tax on Bitcoins before July 31st 2018.
SEE ALSO: How Bitcoins Are Taxed In India?
Bitcoin investors are really scared. Bitcoin investors are worried that if they do not sell Bitcoins and take out the money, they might never get the opportunity to transfer the money to their bank accounts.
Simply speaking….Bitcoin investors will be stuck with Bitcoins….
The Government, RBI and Tax authorities are chasing Bitcoin investors. Bitcoin investors are really scared. Bitcoin Exchanges Zebpay and Coinsecure have seen a huge increase in Bitcoin Transaction volumes. More than 90% has been on the sell-side.
SEE ALSO: Why Bitcoins Are Dangerous For You?
Tax on Bitcoins are levied, depending on whether gains from Bitcoins are classified as business income or capital gains. There is a high chance the Income Tax Department might consider the trading of Bitcoins as capital gains or speculative business income.
Speculative business income is taxed at 30%. Gains from Bitcoins are considered long-term, if held for 36 months or more. LTCG is taxed at 20%. STCG (If investments are held for less than 36 months), are taxed at 30%.
Tax advisers have advised their clients, to pay a maximum 30% tax on Bitcoin gains. The idea is the Government agencies like Enforcement Directorate and Tax authorities might not pay too much attention if maximum tax is paid. Be Wise, Get Rich.
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