The world is getting attracted towards the Crypto World and the most fascinating reason behind the same is the unreal soaring of cryptocurrency’s price.
People are making fortunes out of their investments in digital currencies such as Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and many more altcoins.
But this is also raising an alarm worldwide. And the governments of various countries are releasing statements issuing a warning about the risks involved when investing in cryptocurrencies.
Fear, Uncertainty, and Doubt
According to the increasing fear that is engulfing tax authorities and other institutions worldwide, cryptocurrencies are working as a catalyst for money laundering, tax evasion, and terrorist funding. And this fear is creating uncertainty and a pinch of doubt in the minds of crypto investors as well.
The rise in ICOs are also a major cause for the authorities and venture capitalists to have sleepless nights. Various blockchain tech startups altogether have raised more in Initial Coin Offering (ICO) than the investments made by Venture Capitalists in 2017 so far. It is currently stated as one of the most insecure investment as there are many cases where the ICO project turns dead in a short while or turns out to be a scam. Recently, USA has issued a strict guideline in which it clearly states that only accredited investors are eligible to invest in ICOs considering the risk involved.
While many are optimistic about Bitcoins growth by predicting its price to be at $40,000 by the end of 2018. On the other, there are people who call it a pure bubble as it lacks utility.
At the time of writing this article. Morgan Stanley stated that Bitcoins actual value is 0!
This statement comes after bitcoin recovering from a turbulence which took it down at $11,000 from $19,500 within 2 days. And such statements by influential personalities won’t let bitcoins price to have a steady growth.
We have witnessed different reactions varying from nation to nation. Some have legalized it while some have banned its use completely. Certain African and Asian nations have termed it as illegal.
Whereas EU and Argentina have considered it as a virtual currency, not a legal currency though and thus making the purchase of bitcoin as non-taxable. But the goods or services rendered by using bitcoin will be taxed accordingly under the governing law. The United Kingdom specifically mentions that the profit made out of cryptocurrency are subject to capital gains tax. And the only country which states clearly that the miners will have to pay 17% VAT, as well as the income tax on it, is Israel.
Tax regulation in India
In various countries, the regulation is still not clear. India being one of them has not yet declared it as illegal nor issued a statement making it legal.
People in India have a different understanding on how the digital currency should be taxed. We surveyed a little about it and found that some consider it as an investment which should be taken under capital gains tax or consider it taxable as per the Indian Income Tax Act of 1961. While some don’t know how to show it in their accounts.
While talking to some crypto traders in India we found that despite a lack of clear guidelines they are considering the investment in bitcoin as a STCG/LTCG i.e. short-term capital gain and long-term capital gain. If the digital currency is traded very frequently then they consider it as STCG and thus account it under 15% capital gains tax slab. Whereas if the investment is held for long then it is accounted under the 20% capital gains tax slab.
With increasing uncertainty, the Indian tax authority is also pulling up their socks. Recently, Indian tax authority hauled up offices of various Indian cryptocurrency exchanges and acquired information of transactions happened on their platform. And then subsequently thousands of Indians were issued a notice seeking information regarding their investments in cryptocurrencies, especially Bitcoin. This created a lot of tension and made the price of Bitcoin to fall dramatically on Indian crypto exchanges.
We are able to see circular reference in India. It means that the prices of cryptocurrencies are increasing due to increase in attraction towards this world or we can say the other way around that the attraction is increasing due to the increase in price.
We found out that people are more concerned about its legal status rather than its taxation.
Something which isn’t regulated doesn’t make it illegal. And thus, Indians are living with a hope that it will be regulated soon and the government will take the decision in favor of the crypto investors.
Similar hopes are being held by everyone around the globe. So, let’s wait for more reactions from regulatory authorities as they can be the prime reason for the make or break of the Crypto world.