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It doesn't matter whether you're a die-hard crypto trader or whether you occasionally dabble in crypto investing. If you've traded cryptocurrencies during the year, tax filing can get tricky. In case you've been under the impression that crypto transactions are anonymous and you don't really need to worry about paying taxes on them, you are wrong.
The India Income Tax Department had asked top crypto exchanges like WazirX, Coindcx, others for information on their India-based customers. What's more, they actually used this information to send out letters to suspected tax evaders.
This is all to say that the India Income Tax Department is taking crypto taxation very seriously. So if you've been less than 100% when it comes to filing your crypto tax returns, this is the time to make up for it. If you're feeling overwhelmed and are not sure where to start, sit with your CA / Chartered Accountant and check whether they're up for the task of handling your crypto taxation. You can ask them these 7 questions to make sure they're up-to-date with the latest in crypto taxes and can help you sort out your crypto tax woes in time.
The India Income Tax Department treats cryptocurrency as property which means crypto transactions are treated in the same way as property transactions. To put it simply, if you sell crypto within one year of buying it, you will be subject to Short-term Capital Gains Tax (SCGT). If you wait for over a year, you will have to pay Long-term Capital Gains Tax (LCGT).
This is a doubt that a lot of people have. If you didn't technically "sell" the cryptocurrency, do you still need to pay capital gains tax? However, the India Income Tax Department is quite clear about this. "Disposal" of any capital asset constitutes a taxable event. Disposal can mean a number of different things — from selling crypto to exchanging crypto for other cryptos, using crypto to purchase other goods, or even gifting crypto.
So how do you calculate your capital gains in this case? When it comes to crypto-to-crypto exchange, you need to keep accurate records of all your transactions. If you haven't done so yet, you can use crypto tax software to get your records in order. In this case, the fair market value of the crypto that you exchanged as on the date of the transaction will be the sales proceeds. You can then deduct the cost of purchase from the sales proceeds to calculate your capital gain.
The salary you receive in crypto has to be added to your taxable income when it comes to calculating your taxes. The India Income Tax Department follows a fairly straightforward rule here — the fair market value of the bitcoin on the date that you received it is what will be added to your gross income. In this case, it's important for you to maintain accurate records as to when the cryptocurrency was credited to your account.
The answer to this depends on the nature of mining. For instance, you might be mining bitcoin but as an employee working for someone else. And the bitcoins mined are not in your name. In this case, you would be treated as an employee and would not be subject to self-employment tax.
You might also be mining cryptocurrency but as a hobby, rather than a full-time business. In this case, it is not a self-employment activity and you wouldn't have to pay self-employment tax. At the same time, you wouldn't be able to deduct any mining-related expenses either.
If you're mining cryptocurrency in your own name and as a business, you would be considered self-employed and expected to pay self-employment tax. You would also be able to deduct certain expenses (hardware and software costs, electricity and utility bills, etc) from your profits in order to determine your net taxable income.
Most experts believe that the fair market value of the coins received on the date of the fork is ordinary income and is taxable. Plus, this fair market value also becomes your cost basis when you end up selling the forked cryptocurrency.
For starters, you can use our services to help you organize your transactions and maintain accurate records. If there are still some discrepancies (for instance the exchange you used is no longer operational), utilize an estimate and explain why you have used such an estimate in your tax returns. This will safeguard you from a hefty penalty in case the Income Tax Department decides to pursue the discrepancy.
Since the India Income Tax Department is cracking down on crypto tax evasion, you need to act quickly. Schedule an appointment with us and we shall help you navigate this treacherous path.
These are some of the most common questions that crypto investors are currently plagued with and your CA / Chartered Accountant should have strong, confident answers for these. If you're an active crypto trader and you feel like your CA / Chartered Accountant isn't as well-versed in crypto tax matters as they need to be, hiring a crypto tax accountant like us might be a good idea.
DISCLAIMER
The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that we are not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. CA Mitesh and Associates is Mumbai's leading Cryptocurrency Taxation Firm which is committed to helping people navigate complex tax laws and banking regulations. Our main aim is to assist the individuals with applicable laws & regulations compliance and providing support at each & every level to make sure that they stay compliant and grow continuously. For any query, help or feedback you may get in touch here - Appointment with CA
Income tax return filing is the process through which taxpayers declare their taxable income, deductions, and tax payments using a specific form. The calculated total income tax amount is also included in the form. If you have paid more tax than required for the financial year, you will receive a refund from the income tax department. However, if you have underpaid taxes, you must pay the remaining amount and file your income tax returns. There are different types of income tax return forms available, ranging from ITR 1 to ITR 7, depending on the nature of the income. Some forms may require additional disclosures, such as a balance sheet or profit and loss statement. It's important to note that the price quoted above is the starting price only, and you should contact us for complete details.
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FEMA Compliances
FEMA (Foreign Exchange Management Act) compliance refers to the adherence to the rules and regulations set by the Reserve Bank of India (RBI) for foreign exchange transactions. We provide various services related to FEMA compliances. Some of these services are:
Advising on foreign exchange regulations and policies: We provide advice on various FEMA regulations and policies to businesses, individuals, and other entities. We keep ourselves updated with the latest changes in the FEMA regulations and provide guidance accordingly.
Obtaining necessary approvals: We help our clients in obtaining necessary approvals from the RBI for various foreign exchange transactions such as investments, loans, and remittances. We also assist in filing the required forms and documents with the RBI.
Compliance with reporting requirements: We ensure that our clients comply with the reporting requirements under FEMA. We help in filing the necessary returns and forms with the RBI and other authorities.
Conducting audits: We conduct audits to ensure compliance with FEMA regulations. We verify whether the transactions are in accordance with the rules and regulations set by the RBI and provide suggestions for improvement if needed.
Representing clients before authorities: We represent our clients before various authorities such as the RBI, Enforcement Directorate (ED), and Appellate Tribunal for Foreign Exchange (ATFE) in case of any violations or disputes related to FEMA regulations. We assist our clients in responding to show-cause notices and other inquiries from these authorities.
Our comprehensive financial planning service involves several steps that help individuals and families achieve their financial goals. Here are the typical steps involved in comprehensive financial planning:
Establishing the scope of engagement: The first step in our financial planning service is to establish a clear scope of work in discussion with you. This involves understanding your needs and goals, and documenting the scope of the engagement.
Gathering information: We will gather information about your financial situation, including income, expenses, assets, liabilities, and insurance coverage. We will also gather information about your goals and objectives.
Analysing your financial situation: We will analyse your financial situation to identify strengths and weaknesses. This analysis will involve creating a net worth statement, a cash flow statement, and an income tax projection.
Developing a financial plan: Based on the analysis of your financial situation, we will develop a financial plan that addresses your goals and objectives. The plan will include recommendations on budgeting, debt management, retirement planning, investment strategy, insurance coverage, and estate planning.
Presenting the financial plan: We will present the financial plan to you, explaining the recommendations and answering any questions you may have.
Implementing the financial plan: Once you agree to the recommendations in the financial plan, we will help implement the plan. This will involve setting up investment accounts, purchasing insurance policies, or making changes to your budget.
Monitoring and reviewing the financial plan: We will regularly monitor your financial plan and review it with you to ensure that it is still aligned with your goals and objectives. We may make adjustments to the plan as needed.
Overall, the goal of our comprehensive financial planning service is to help individuals and families achieve their financial goals by creating a plan that is tailored to their specific needs and circumstances.
To register a Sole Proprietorship in India, the proprietor must be an Indian citizen and a resident of India. No prior approval is required before starting the business. However, Non-Resident Indians (NRI) and Persons of Indian Origin can invest or start their sole proprietorship business only with prior approval from the Government of India. As Sole Proprietorship is an unorganized business structure, there is no specific law enforced for its registration. Our services for Sole Proprietorship registration are provided under the MSME (Micro, Small and Medium Establishments) Development Act, 2006 of the Central Government. The business entity must fulfill the registration requirements to obtain the registration certificate. Once registered under the MSMED Act, the entity can avail of subsidies, incentives, and schemes launched by the Central Government specific to their business.
The Partnership Act provides that both registered and unregistered partnerships are valid and recognized by law. Partnership registration is not compulsory but is beneficial due to effects of non-registration. Mostly, the businesses at initial level prefer unregistered partnership till they reach stable level. The unregistered partnership can be registered at any time after its formation. Formation of Partnership Firm does not require any minimum amount. It can be started with any amount of capital contribution by the partners. Only a registered partnership firm can claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party. Hence, it is advisable for partnership firms to get it registered. The application for Partnership Firm Registration in India is submitted with the Registrar of Firms (RoF) under whose jurisdiction the Place of Business of Partnership Firm falls.
LLP is the upgraded version of Normal Partnership Firm. Limited Liability Partnership has been introduced by the LLP Act 2008. Limited Liability Partnership has an easy structure as compared to the Private Limited Company. LLP is suitable for Consultants, Advisers, and Lawyers/Professionals. LLP registration is very pocket-friendly in terms of increasing the Capital, Annual returns and legal compliance etc. There is no need to appoint a Statutory Auditor if your annual turnover is less than 40 Lakhs. If you are planning to register the LLP, make sure that you file an annual return on time. There is no Dividend Distribution Tax on the distribution of profits to its partner. The partner can freely lend loan and borrow the loan from LLP without any Compliance issue.
Private Limited Company is a most popular business structure in India, Startup always runs towards the Pvt Ltd Company registration. It has separate existence than its Members and Directors. The Liability of its Members is limited to their Capital contribution in the Company. Venture Capital funds are easily available for Pvt Ltd Company. The operation of the Private limited company registration is more organized than LLP/OPC. More than 90% of Indian Startups have opted for the Private limited company. After Private Limited company registration, you can raise the funds from investors. External funding is not permissible in any other legal structure. You can easily scale your business after forming a private limited company. Private Limited Company is eligible for 3 Years tax benefits under the Startup India Program.
One Person Company (OPC) has been introduced by Companies act 2013. It is a more latest corporate structure in Proprietorship. In OPC Structure you will get almost all the benefits of Private Limited Company so it is advisable to start a Sole Ownership. There is no dividend tax on profit distributed to its owner in OPC. Furthermore, OPC is eligible for Startup India Program and can enjoy tax-free status for 3 years.
Public Limited company is a broad level association of members who intent to float a company with a mission of IPO etc. Public limited Company has the benefit of raising fund from Public. But this structure is NOT suitable for the early stage startup. The Annual Compliance cost of the Private limited company is less as compared to a public Limited company, so we would strongly recommend to start a business as Private Ltd. For Public Limited Company Registration, the minimum number of directors must be three and a minimum number of shareholders must be 7.
Accountancy: This includes the writing up of accounts and the preparation of financial statements. It encompasses a wide area ranging from simple Book keeping to complex financial analysis. Auditing: The purpose of auditing is to satisfy the users of financial statements that the accounts presented to them are drawn up on correct accounting principles and that they represent a true and fair view of the state of affairs of the organisation. Taxation: The assessment of taxes is very closely linked with financial accounts. We as Chartered Accountants with our experience in accounts & taxation offer to prepare the returns for tax purposes, represent assessees before the Income-Tax authorities and rendering general advice on taxes to our clients. We also undertake Special Company Work such as the formation, financial structure and liquidation of limited companies. We undertake complete Secretarial and Registration work.
As per Income Tax Act 1961, Any person responsible for paying to Non Resident or Non Resident Indian, neither being a company nor being a foreign company, of any interest or any other sum chargeable under the provisions of Income Tax Act, 1961 (Excluding income chargeable under the head “Salaries”). Any such payment shall at the time of credit of such income to the account of payee or at the time of payment through any mode i.e. Cash, Cheque, Bankers Cheque, Demand Draft or any other mode should deduct TDS at prevailing TDS Rate under section 195.
The purpose of this meeting is to fully understand your unique situation, including your goals, concerns, challenges, aspirations, and risk tolerance. We do not have any prior knowledge about your personal life, such as your marital status, whether your spouse is employed, the number of children you have, whether you support any dependents, and whether you plan to pursue further education. Additionally, we do not know your current financial investments, cash flow, or any outstanding debts. Without a comprehensive understanding of your individual circumstances, we cannot offer any advice or develop a strategy to improve your financial well-being.
NRI seller can produce NIL / Lower Tax Deduction Certificate under section 195 & the applicable TDS rate will be as per certificate issued by the income tax department. The original certificate will be retained by the buyer. To obtain NIL / Lower Tax Deduction Certificate under section 195 is sole responsibility of NRI Seller.
It is mandatory for any business whose aggregate turnover in a financial year exceeds Rs 20 lakhs to get GST Registration under Goods and Services Tax. This limit is set at Rs 10 lakhs for North Eastern and hilly states flagged as special category states. Also, the definition of taxable turnover has been changed to aggregate turnover. PRICE quoted above is the Starting Price ONLY. Please call us for complete details.
All individuals registered under the GST Act has to furnish the details of the sales and purchases of goods and services along with the tax collected and paid. This can be done by filing online returns. GST Returns are the Goods and Services Tax Return forms that taxpayers of all types have to file with the income tax authorities of India under the new GST rules. PRICE quoted above is the Starting Price for one month of filing returns. Please call us for complete details.
GST Zero Return
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