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Ankit_Sonkar   05 June 2022

Do I pay taxes on crypto if I don't cash out?

The Indian tax bill says that I owe 30% taxes on all profits made in crypto. So I am assuming that if I have a business that's making sales in cryptos I will be liable to pay 30% on all the income that I have earned from it.

But what if I decide to reinvest all of this income back into growing the business? Since the business is a DAO I can't register it as a company so how will the court draw this line between me as an employee in the DAO and me as an investors?

The government cannot force me to sell my cryptos to pay the 30% tax can they?

What if I say that whatever income I have received I am currently hodling it, will they still force me to liquidate?


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 4 Replies

Mahi Manchanda   27 June 2022

Hi,

You will have to pay tax only when you earn an income from a transaction, transfer or exchange or crypto or other virtual digital assets. No tax is to be paid for holding crypto. It should be noted that in case any taxpayer has earned any income from the transfer of a virtual digital asset, the said income shall be subject to tax at the rate of 30%.

If the crypto currency is held for more than 36 months, then your gain will be classified as a long-term capital gains tax and will be subject to tax at 20%, plus applicable surcharge and cess but post indexation. This means that your tax amount will be calculated after adjusting for inflation index. Since the purchase price is adjusted for inflation, the capital gain gets reduced. 

If the transfers are large and frequent, it could be held that the taxpayer Is trading in cryptocurrency and so the income from sale would be taxable as business income. If reported as business income, the GST on them will also be examined.

I hope this answers your question.

Have a good day!

1 Like

Jason Hanks   01 July 2022

The NBFCs are a unique and interesting segment of the Indian financial services industry. We have seen many NBFCs come up in the last few years, but they have all got different business models and goals in mind. You can get Nidhi Company or Nidhi registration online.

Whether they are microfinance institutions that provide loans to small businesses, or venture capital firms that invest in companies looking for finance, or even lifestyle lenders that provide loans to people with good credit scores, there is a lot of variety in the NBFC sector.

1 Like

Ankit_Sonkar   01 July 2022

@Mahi Thank you for the reply! 

Just to clarify, until I cashout my crypto's into INR I don't need to worry about the taxman knocking on my door and am free to compound my wealth indefinitely. 

Also, if I borrow money against my crypto's am I laible to pay any taxe's on that loan?

simmi dhaka   18 May 2024

Hey Ankit! When it comes to taxes on crypto profits in India, it's good to know that any gains you make from trading cryptocurrencies are taxed at a rate of 30%. If you run a business that earns income in cryptocurrencies, that income is also likely to be taxed at the same rate. Remember, reinvesting your income to grow your business doesn't mean you're off the hook when it comes to taxes.

It's important to remember that tax laws and regulations can change over time, and it's always best to consult with a tax professional for accurate and up-to-date advice specific to your situation.


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