Hard Fork | Talk Show | Season 01 | Episode 07 | The Unknown truths About Crypto Taxation in India

Crypto in India

India’s exposure to Cryptocurrencies or Cryptoassets (whatever we may want to call it) has been mostly been from the early part of 2016. However, I have come across several people who have had the understanding the prudence to get engaged early on. But this is not what we are going to discuss here. It is the latency in the understanding of the general public that, authorities do get involved when money or the national currency is involved.

There was a flurry of activities in 2016 till April 2018 – that is when the stoppers came into picture and the non-serious money makers where charted off the market by the RBI. So while the crypto activities did reduce, the authority activities increased.

The Taxation conundrum

In April 2018, the Income Tax Department in India started sending notices to traders and others (to about 500,000 of them) who had been doing investments or trading in Cryptoassets. It is then that the whole crypto community woke up to the fact that there will be scrutiny of the fiat vs crypto movement. However, the problem was clarity; there was no ruling or law or provision specifically for cryptos or digital currencies for that matter. Hence the income tax consultants had their task cut out to find out how the authorities will be treating transactions done to and from cryptos.

So while there has been some headway, there was still the lack of proper communication or understanding of the truths about taxation related to crypto in India.

Questions on our mind

That is why we at Hard Fork Talk Show, decided to do an episode which will focus on the crypto taxation. We had the following questions in our mind when we were framing the thoughts around this episode:

• What is the current regulatory scenario regarding crypto taxation?
• Are cryptos really taxable in India? If yes, what are the provisions under which a crypto transaction is taxed?
• Is the Income Tax Department equipped to understand crypto transactions? Can they possibly trace them?
• Can a taxpayer get into trouble if he discloses earnings from crypto?
• What has been your experience when you talk to Indians about crypto taxes?
• What are your thoughts on holding crypto overseas? Can it reduce tax outflow?
• P2P trading involves receipt and payments to random bank accounts. Can this cause any trouble?
• From a tax perspective, what are the biggest hurdles in widespread adoption of crypto in India?
• How can we make the tax environment friendlier for the Indian crypto community?

The guest

To answer all these questions we invited ** Anoush Bhasin**, a Chartered Accountant by profession and Founder of Quagmire Consulting. Quagmire Consulting was founded with the objective of assisting active members of the Indian Blockchain industry in complying with existing Tax Regulations. So Anoush has had tremendous amount of experience in handling crypto related taxation over the past one and half years. Apart from this, his understanding about the technology is also immensely sound.

He is also very active in consulting with state governments and organizations in Blockchain and setting up a sound processes which comply with laws of the land.

The conversation

Anoush brings to the table some great insights into the workings of the authorities, pre and post the RBI banking moratorium. Some of the answers to the above questions were eye-opening. For example, it was a perception that the income tax officials do not have enough knowledge about the Cryptocurrency and Blockchain field. Anoush brought insider information on this query. Contrary to popular belief, the Income tax officials have been trained well enough about this new technology, about Bitcoin and altcoins, the workings of exchanges, crypto mining, scam coins…basically the whole nine yards.

Yet another view was on the P2P models of exchanges which he believes will be a cause of concern in the times to come for all those who are involved trading in this model. He was of the opinion that people should protect their data on the exchanges and ensure that they ask questions which concerns them.

Hear it more on the Episode.

End Notes

We premiered the 1st episode on Amazon Fire TV on 22nd April 2019 and officially launched the founderINDIA channel on 23rd April. All Hard Fork Episodes will also be simulcast on other platforms including YouTube.

Watch Hard Fork Episode 7 with Anoush Bhasin on Amazon Fire TV (FounderINDIA channel), YouTube and Facebook .

We would love to hear genuine feedback from our viewers about the episode. If you like it please leave a comment, like it, subscribe the channel and do share it with like-minded people and beyond. Or write to us at [email protected] and [email protected].