Crypto currency (virtual currency) is the “currency” of electronic data exchanged on the Internet. Although trading with a forex account India is a risky investment destination due to the volatile price fluctuations, it is a popular investment target because one can generate large profits with the help of a forex account India. This article will explain the tax on crypto assets (virtual currency) and the necessity of a final tax return.
To protect users of crypto currency assets, the “Financial Instruments and Exchange Law”, “Financial Instruments and Exchange Law”, and “Financial Instruments and Exchange Law” was amended on May 1, 2020. Crypto currency business operators with forex account in India are obliged to trust crypto currency assets, deal with outflow risks, and establish rules so that investors can use them with peace of mind.
Outline of “Fund Settlement Law” Amendment with forex account India
Under the revised Funds Settlement Law, the names such as Bit coin (BTC) and Ethereum (ETH) have been changed from “virtual currency” to “crypto currency”.
In addition, it has been stipulated that businesses responsible for the storage and management (custodian business) of cryptocurrency assets that did not require registration with the Financial Services Agency will also be registered with the Financial Services Agency in the future. This amendment aims to promote user protection by increasing the credibility of cryptocurrencies.
Outline of “Financial Instruments and Exchange Law” Amendment
Considering the background of the birth of new forex account India trading methods for crypto assets, regulations on financing methods such as ICOs and STOs using crypto assets, and financial derivative products such as futures trading and options trading have been established.
Before conducting such transactions, it is necessary to apply for registration and prior notification of the financial instruments business. In addition, due to the high number of fraudulent activities in cryptocurrency transactions, unfair acts such as price-fixing and the spread of rumours were prohibited.
Outline of revision of “Financial Products Sales Law.”
The revised Financial Instruments Sales Law has added an obligation to explain claims for damages to crypto-asset exchange operators. Until now, even if a user tried to claim damages due to a lack of explanation from a cryptocurrency exchange company, he had first to prove whether there was an obligation to explain.
With this amendment, it has been decided that forex account India exchange companies will be obliged to present the claim for damages, so the burden on the user side will be reduced.
Even if you have no income other than salary and have never filed a tax return, you may need to file a tax return if you make a profit of more than 200,000 INR in a crypto asset transaction. “Profit” is not considered as income when it is transferred to the account, but on hand, such as “when selling crypto assets”, “when paying with crypto assets”, or “when exchanging crypto-assets”. Remember that it’s time to let go of your crypto assets.
The profits earned from the investment must be paid the income tax for the income generated by the final tax return. A final tax return is a procedure to settle the excess or deficiency of taxes according to the amount of income earned during one year (January 1 to December 31). Many people have the negative image of filing an additional tax return, but it is also essential for those who want a refund and profit.
What if I don’t file a tax return?
Many people feel that they have to file a tax return and pay taxes when making a profit from cryptocurrency assets. But what if you ignore your tax returns?
The tax office knows whether or not you have income, regardless of whether you are an individual or a corporation. The company submits a “salary payment report” to the municipality for salary, and a “payment record” is submitted to the tax office for other remuneration. In addition, the tax office can view transaction records under the name of tax audit on crypto currency exchanges.
As a tax escape method, an account in the name of a relative or acquaintance is often used. From the transaction record, it is possible to know whether or not the profit on sale was intentionally hidden.
Many people think that they don’t make much money and that it’s okay, but the NTA regularly conducts priority investigations to understand undeclared tax returns. This is because non-declaration is an act that directly leads to the crime of “tax evasion” and cannot be easily overlooked.
However, you are not suddenly arrested without a declaration. If you inadvertently forget your tax return, you can pay your tax by filing your tax return. At this time, additional taxes such as extra undeclared tax and delinquent tax will be levied, so you will have to pay more taxes than initially intended.
However, suppose it is considered that “the income was intentionally hidden”. In that case, a heavy additional tax will be added to the extra undeclared tax and delinquent tax, and a higher additional tax will be levied.
In 2019, he pointed out at least 80 cases of individual and corporate tax returns, totalling 10 billion yen, and in April 2021, he was convicted for the first time of a man who declared a small gain on the sale of Bitcoin. Came down.
In some cases, the NTA and tax offices outsource tax audits, and there are organizations investigating individuals who try to hide their small profits. In this way, the tax office is also actively putting in scalpels regardless of the size of profits, with the view that “cryptocurrency assets are rampant in tax evasion.”
Just because the tax office “doesn’t say anything” doesn’t mean it’s not out. If we consider it malicious, we may point out an omission of filing when the additional tax is levied. Tax returns are time-consuming, but undeclared tax returns are an unprofitable and disadvantageous choice. Make sure to complete your tax return to trade with crypto assets.
What is the tax levied on crypto assets (virtual currency)?
“Income tax” is imposed on crypto assets. Income tax is divided into ten types, but most of the profits earned from virtual currency transactions are classified as “miscellaneous income”. Income is subdivided in to nine types, such as “wage income” obtained from a company, “business income” received from a business, and “interest income”, which is interest on deposits and savings.
It is classified as “miscellaneous (other) income”. If you have crypto assets as part of your business, you will be classified as business income, but this time let’s look at the pattern classified as “miscellaneous income”. The characteristics of miscellaneous income are the following four points.
There are “comprehensive taxation” that is calculated by adding up with other income and “separate taxation” that is calculated by separating only that income, but the profit of cryptocurrency assets is “comprehensive taxation”.
Forex account India falls under “separate taxation”, so it is essential to check the income calculation method according to the type of income even with the same miscellaneous income. In addition, “comprehensive taxation” does not add up everything, and forest income and capital gains are excluded in the case of individuals.
“Progressive taxation” is a system in which the higher the income, the higher the tax rate. Since there is no “reverse taxation” in which the tax rate increases as the income decreases, it can be said that the system is a pair of “proportional taxation” with the same tax rate regardless of the tax amount, as represented by the consumption tax. Income tax has a tax rate of up to 45%. If you include 10% of the residence tax, you will be subject to a maximum of 55% tax.