International Tax Panorama

In India, the rules and regulations concerning Crypto are often fuzzy, as a crypto reporter and trader Naimish Sanghvi found out the hard way. 

Sanghvi claimed to have received an income tax notice that ordered him to cough up 9.5 million Indian Rupees he allegedly owned after crypto trading. 

However, a further dive into the issue revealed that the ITD considered only the Coindelta exchange, where the reporter sold the crypto, and not the exchanges where he bought it.He had bought crypto on Zebpay, Koinex and sold on Coindelta.

Due to this the officer only had data of Coindelta. So they saw that there was a profit of 90+ lakhs, but they didn’t know that the investor had purchased that crypto from another exchange.

Eventually, the crypto reporter provided all the necessary details on his transactions, and the ITD concluded that Sanghvi owed the government only 3 INR tax on his crypto income. 

What does the law says? 

Selling crypto for fiat currency

Any profits from selling crypto for fiat currency like INR are subject to a 30% tax rate. You’ll also have a 1%TDS deducted by Indian crypto exchanges, or by the buyer in the case of P2P and international platforms.

Do you pay tax when transferring crypto?

You won’t pay tax when you transfer crypto between your own wallets, as there is no exchange of ownership 

Here are a few tips for investors embroiled in similar situation

1. If you’re a crypto trader in India, it’s imperative that you have the data of your trades with you at all times. All of your exchanges have to share the trading data with various authorities when asked. 

Hence, any department will know your trading or INR volume on any Exchange.

2. Properly reply to the notices on time. Take help from CAs when needed.

3. Do not panic if you get a notice from income tax department. It’s a process. 

3. Do not lie. If you did evade taxes, pay them.

4. Most important – Connect with friends and family and let them know your situation. They can help you cope when you’re frustrated or nervous.