In India, the stance on cryptocurrency taxation is debatable and confusing. The taxation on cryptocurrency has been unclear and confusing among investors. Bitcoin become a popular asset now and was once seen as a risky investment. In India, recently there were no specific rules for Bitcoin’s profit taxation caused to investors who made large profits. Even so, there is a recent income tax case that brought clarification about how Bitcoin should be taxed in India.
A notable case came across in which a person named Ronak Prakash Jain, a cryptocurrency investor in India. He challenged the income tax department's notice which says that the bitcoin cannot be considered as a virtual digital asset and its profits as income from other sources that applied 30% taxation. The investor bought a bitcoin of 5 lakhs in 2015 and sold it for 6 crore in 2021-22. The notice asserted that bitcoin should be taxed as income as it is not clearly defined as a capital asset.
Objecting to the view, the sectionhis situation to the income tax court which is the income tax appellate tribunal (ITAT). The court gave their decision in favour of the investor where they said “Bitcoin is a property or right that came under section 214 of the income tax act. In this case,the section was validated as he was holding the Bitcoin for more than 36 months, where the investor argued that the Bitcoin should be taxed as long-term capital gains at 12.5%, not 30%.
In concluding the case, we saw that the decision was in favour of the investor and provided essential clarity on cryptocurrency taxation in India. If we look into present taxation as per the union budget 2022, the Indian government charges a 30% tax on profits from selling bitcoin, regardless how long you hold them. Since cryptocurrencies are not well defined as capital assets in India.
