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There is no doubt that India is one of the most disoriented countries in bitcoin regulation. When the Reserve Bank of India simply withdrew banking access to entities dealing with cryptocurrencies, public opinion misunderstood it as a true cryptography ban. Those who realized they could still trade cryptographic badets outside the RBI's jurisdiction – using peer-to-peer systems – are now confused about their tax obligations.
There are two contradictory perspectives among Indian bitcoin users. First, if they report profits from investments or trading activities in encrypted currencies and currencies, this would prove that they use banks regulated by the RBI despite the ban. Second, if they hide their gains, they would directly violate the country's capital tax laws.
False invoices
Under the current ban, cryptocurrency users can not enter the Indian fiat system. Banks in the public and private sectors follow the guidelines set by the RBI, which means that their account holders must follow the same rules indirectly. Thus, if a user, for example, sells a bitcoin token in an over-the-counter trade and receives Indian rupees in return, he / she violates the ban on the RBI's cryptographic bank. Generally, most of these traders are settled in cash, leaving no way for RBI to detect their presence. However, merchants using Internet banking conceal such transactions using false invoices.
Since RBI has already banned Crypto transactions through the bank, if I have to pay #TAX on the income from investments and badets of Crypto?#taxoncrypto
– Crypto Kanoon (@cryptokanoon) March 25, 2019
On the promise of anonymity, the owner of an over-the-counter cryptocurrency exchange based in New Delhi told NewsBTC that he was performing cryptographic transactions worth 4 USD 000 per day.
"We often have to create fake invoices for cryptographic transactions exceeding Rs 49,000 (around US $ 711)," she said. "In general, we make it look like IT support services."
The owner explained that he had been forced to take these measures because of the lack of regulations regarding cryptocurrency, adding:
"My cousins and I have been investing in bitcoin since 2015. We could not give up everything as a result of the RBI ban. We are ready to declare our badets and pay taxes when they create a law. But until now, they have given no indication in this direction. "
It should be noted that last February, the Central Direct Tax Council of India issued 100,000 tax notices to traders and investors in cryptocurrency. President Sushil Chandra said he "thought" that the profits made on investments in cryptocurrencies constituted a taxable event, citing the wish of Finance Minister Arun Jaitley to eliminate the illicit use of cryptocurrencies.
Case pending before the Supreme Court
The Supreme Court of India has been seized of a case involving the authority of the RBI which imposed a banking ban on the cryptography sector. The Indian Supreme Court had previously ordered the central bank to submit its first draft proposal for a crypto-badysis regulation within four weeks, the deadline expiring on March 29, two days before the end of the fiscal year.
RBI has not revealed whether it would ban Bitcoin or not, since the bank has remained silent on its views on the regulation of cryptography up to now. Depending on the outcome, taxpayers might have a better idea of how they should receive their cryptographic investments. Until then, declaring cryptographic badets could push them on both sides of the pit.
A clear catch-all situation.
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