There is confusion among many on how the crypto earnings from investments in cryptocurrencies, and crypto earnings should be disclosed in the ITR as there is no clarity on it. As per the provisions of the Income Tax Act, an assessee – having an annual income of more than Rs 2.5 lakh or who has received any payment on which tax was deducted at source (TDS) – needs to file Income Tax Return (ITR), disclosing all the earnings.
However, there is confusion among many on how the earnings from investments in cryptocurrencies should be disclosed in the ITR as there is no clarity on it. But due to the confusion, the nature of earnings from investments in cryptocurrencies has not been defined yet. So, there is no clarity on the taxation of such earnings.
In India, the cryptocurrency sector is in a very nascent stage. A lot in terms of regulations and taxation needs to be done. Crypto earnings ought to be taxed as a short or long-term capital gain based on the duration they were held as an investment.
In fact, the Reserve Bank of India (RBI) had banned holding or trading cryptocurrencies in India. The RBI ruling, however, was set aside last year by the Supreme Court, paving way for investments in cryptocurrencies in India.
“Tax implication on any profit or gain arising from holding and crypto earnings will depend on its nature whether it is a currency or property. Generally, cryptocurrencies are used for the exchange of goods or services. Currently, in India, cryptocurrencies are not recognized by RBI as a currency and similarly, income tax law also does not define it as a currency.
So, cryptocurrencies cannot be regarded as currency either an Indian currency or foreign currency. Therefore, for the purpose of income tax, it will be regarded as property, and tax implications will be similar if one is holding any other property.
In other words, the profit or gains arising from cryptocurrencies either can be taxed as business profit if the same is acquired with the intention to make a profit by trading/mining or a capital gain if the same is acquired with the intention to create wealth,” said Gopal Bohra, Partner, NA Shah Associates.
However, it won’t be proper to not disclose the earnings from crypto investments, simply because there is no clarity on taxation. “The number of earnings generated by investing in cryptocurrencies may be highlighted under ‘Income from Other Sources’,” opined Gupta.
“While cryptocurrencies have not been categorized under any tax bracket, so far. But the Income Tax Department can monitor crypto earnings investors that are registered through KYC/AML compliant exchanges, with the help of PAN,” said Atuly Bhatt, CMO, and co-founder of BuyUcoin.
“The fact that earnings from cryptocurrencies are being considered as a taxable income is a positive indication as it also implies Crypto is being considered as a potential asset class,” he added.
The lack of clarification about the taxation on crypto earnings, however, may result in disputes.
“The taxation of cryptocurrency is a contentious issue and would definitely be prone to litigation. As of date, the Income Tax Act does not deal with the taxation of cryptocurrency explicitly.
In this backdrop, based on the available guidelines in determining the nature of income, the common perception is that crypto gains are speculative incomes and shall be disclosed under the income under the head profits and gains of business or profession,” said Divakar Vijayasarathy, Founder & Managing Partner, DVS Advisors LLP.
Ethereum Addresses Hit a 35-Month High, ETH Price Predictions are Bullish
Ethereum has risen slightly from its lows from last week, currently trading at $586 at press time. Although Ethereum is still significantly far away from its all-time high, analysts are predicting that Ethereum’s price has room to rise.
Evercore Says PayPal’s Crypto Offering Could Bring Big Business Boost
Advisory company Evercore has named PayPal (PYPL) as its top payments stock and said the firm’s recently launched cryptocurrency offering could be good for profitability.
With Google’s Gmail, YouTube, etc. suffering outages, is it time for a decentralized solution?
The Google App Engine has suffered several outages in 2020, outages that have ranged from 45 minutes to nearly two hours. The present outage, in fact, is the ninth time users were hit in such away. Filecoin or not, decentralization is the need of the future workplace and the Internet.
Band Protocol Becomes First Blockchain Project to Join OpenAPI Initiative
Band Protocol announced Monday it will help the project create a common API standard enabling blockchain applications to easily leverage APIs (application programming interfaces) and data. Band Protocol has become the first blockchain firm to join the OpenAPI Initiative alongside big names such as Google, eBay, IBM, and Microsoft.
Grayscale’s Ethereum Holdings Approaching 3 Million ETH
Arcane Research analyst Vetle Lunde has shared some interesting statistics about Grayscale on his Twitter page—about the company’s ETH and BTC holdings in particular. According to the chart Lunde shared, since January, Grayscale Investments has increased its ETH stash from 0.5 million ETH to the current amount close to a staggering 3 million Ethers.
Over the weekend Bitcoin (BTC) price made a push back above the $19,000 level as traders showed up and provided enough volume to support the surge.
At the time of writing, BTC price breaking above a pennant but the $19,300 to $19,500 range continues to present significant resistance. According to Cointelegraph contributor, Rakesh Upadhyay:
“If the bulls can push the price above the $19,500 to the $20,000 overhead resistance zone, it will complete an ascending triangle pattern that has a target objective of $22,808.98.”
As Bitcoin bulls attempt topush the price to the $19,500 resistance, a handful of altcoins have capitalized on BTC’s range-bound price action by rallying higher to key resistance levels.
Yearn.finance’s (YFI) governance token is currently showing an inverse head and shoulders formation on the 1-hour timeframe and as the price pushes at the neckline traders will look for a breakout to the $27,750 to $27,850 level.
Risk-averse traders will likely wait for a 1-hour close above the neckline at $26,276 before opening a position.
The 4-hour chart also shows a VPVR gap extending from $26,115 to $27,851 and the RSI has entered bullish territory above 50. In the event of a pullback, the 20-MA may provide support as it sits closely below at $25,468.
AAVE is also showing a similar construction to YFI except that it recently broke above the neckline of its inverse head and shoulders pattern to surge to a 5-day high at $91.78.
This move and the accompanying high volume surge triggered a bit of profit-taking but traders who take a quick glance at AAVE’s chart will notice that lower support retests frequently occur after the rallies like the one seen today.
Profit-taking led to the price retesting the $85.50 support and if this level can hold and Bitcoin doesn’t breakdown from its pennant, AAVE price will likely reclaim $88.30. A daily close above $91.78 will open the door to AAVE securing a new all-time high above $94.90.
Another altcoin quietly making strong moves is Elrond (EGLD) which has rallied 75% since completing a rounding bottom on Dec. 7. Currently, EGLD is up 10.5% today and after topping out at $20.12 the altcoin is pulling back to retest underlying support levels.
While the 4-hour chart suggests that the bullish move has ended, the daily timeframe shows EGLD on the verge of overtaking the Sept. 4 high at $20.50, after which there is no overhead resistance and the possibility of a new all-time high above $35.
If Bitcoin price successfully breaks above $19,500 and flips the level to support it’s likely that YFI, AAVE and Elrond will follow in tandem.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
As altcoins and even Bitcoin take pause, DeFi standout AAVE is a “monster” that is now reawakening and ready for new…
As altcoins and even Bitcoin take pause, DeFi standout AAVE is a “monster” that is now reawakening and ready for new highs, according to one analyst.
Moments after the analyst’s public call, Coinbase Pro revealed that the DeFi token would be listed on the popular trading platform. If a pair of low-timeframe patterns confirm and push the asset higher, the coinciding Coinbase news could be the catalyst that sends AAVE soaring into full-blown, price discovery mode.
AAVE And The Two-Headed “Monster”
AAVE is the one token in the cryptocurrency market to beat out even Chainlink in 2020 – the industry superstar for the last three years running.
The DeFi token has been around since the crypto bubble and experienced a bear market and drawdown just like the rest of the market, yet somehow managed to squeeze out over 7,000% ROI in a single year.
Numbers like that are reminiscent of early Bitcoin bull markets, but the “monster” that is AAVE could only just be getting warmed up.
AAVE has an even more limited supply than Bitcoin, but there could be arguably more utility thanks to the token being central to DeFi borrowing and lending.
Whatever the reasons, the token has had a beast of a year and after a short nap, one analyst says this “monster” is awakening and about to claim new highs.
DeFi Token Targets New Highs, Coinbase Pro Listing Catalyst For New Momentum
A two-headed “monster” made up of two inverse head and shoulders patterns could send AAVE to $120 per token. The line on the Relative Strength Index signaling the bearish divergence before each drop also acts as a trend line before each pattern’s breakout.
Another breakout could be here, and the already hot token will be getting some assistance from Coinbase Pro. AAVE is among three other coins the exchange is listing, alongside DeFi brethren Bancor and Synthetix.
AAVE is already well above its former all-time high set atop the previous bull market and has even confirmed a bullish retest of the resistance level flipped support.
Zoomed out, the entire downtrend and bear market culminated in a rounding pattern, creating what appears to be a massive, three-year-long, cup-and-handle continuation pattern.
Along the way up to form the handle, each level of resistance turned support was marked with a successful retest, and the most important retest of all took place at the low set just a few months ago – right at the former peak price.
This “monster” has effectively slain the bear market and turned full bore bullish. If the summer DeFi high has now been – like the asset’s former all-time high before it – flipped into support, price discovery mode is back on for AAVE and as the above analyst claimed, new highs will be in tow.
Featured image from Deposit Photos, Charts from TradingView.com
For the first time in years, XRP gained some massive momentum when it broke above $0.30 last month, with bulls sending…
For the first time in years, XRP gained some massive momentum when it broke above $0.30 last month, with bulls sending its price rocketing as high as $0.90 on some exchanges before an influx of selling pressure sent it plunging lower.
This rally gave many embattled bag holders an ideal exit opportunity, with the new capital being siphoned in due to investors trying to gain access to the highly anticipated SPARK airdrop that took place this weekend.
It does appear that this was a “sell the news” event, as XRP’s price has been plunging lower ever since the airdrop snapshot took place. It is now in the process of breaking below its key $0.50 support level, despite the strength seen by the rest of the market.
This weakness has struck a heavy blow to its previously bullish market structure and may be emblematic of a wave of imminent selling as disappointed traders and investors move to take profits.
One trader is now noting that XRP is likely to go back to being the “worst-performing major alt” in the market unless there’s a catalyst for change.
XRP Struggles to Gain Momentum Despite Strong Market Conditions
At the time of writing, XRP is trading down just under 4% at its current price of $0.49. This is around where it has been trading throughout the past few days.
There was previously some support at $0.50 that stopped it from seeing any intense decline, but this support is quickly degrading and may not hold for too much longer.
The selling pressure is so intense that XRP is currently bucking an uptrend seen across the entire market, with BTC and ETH stable.
Fading Airdrop Hype Puts the Token in a Bad Position
Luke Martin, a popular cryptocurrency analyst and trader, explained in a recent tweet that he is expecting XRP to potentially go back to being the “worst-performing major altcoin” as its uptrend begins showing signs of faltering.
He notes that there needs to be another airdrop – or some catalyst – to shift the tides back into bulls’ favor.
“XRP is down 13% since the airdrop earlier this weekend was completed. Holders better hope for more airdrops or this could quickly become the worst performing major alt again.”
Because there appear to be no imminent catalysts for XRP to see any further upside, there’s a strong possibility that further losses are imminent in the near-term.
Featured image from Unsplash.
Charts from TradingView.
As speculations about an impending ban on cryptocurrencies refuse to die down, stakeholders in India are pulling out all stops to get the government on their side. Besides engaging in a dialogue with government agencies to allay their fears about nefarious use cases of cryptocurrencies, industry stakeholders in India have also been suggesting what could be salient features of a regulatory framework for virtual currencies.
In a draft document titled, “Regulatory Sandbox: They Key To Cryptocurrency Mass Adoption In India’, Delhi-based crypto exchange BuyUCoin has put forth arguments in favor of cryptocurrency adoption in India
The recent draft document suggests bringing crypto earnings under the purview of tax, where working professionals would have to declare their crypto earnings under a separate provision of the Income Tax Act
The BuyUCoin document talks about the need for the inclusion of cryptocurrencies in the Reserve Bank of India’s (RBI) Regulatory Sandbox
On October 2, BuyUcoin released the first draft of ‘Regulatory Sandbox: They Key To Cryptocurrency Mass Adoption In India’. Through the document, the exchange has put forth arguments in favor of cryptocurrency adoption and suggested some of the features which could form the core of a model government regulation for cryptocurrencies in India.
The BuyUCoin document mentions that if India were to ban cryptocurrencies altogether, the fallout would be felt in the jobs sector as well, where the demand for proficiency in blockchain technology is being seen currently. The report cites LinkedIn’s “2020 Emerging Jobs Report India” which mentions blockchain developer as the most sought-after career over the last five years.
Source-based media reports have mentioned that even the draft bill that proposes a blanket ban on cryptocurrencies, talks about the adoption of blockchain technology for managing land records, pharmaceutical drugs supply chain or records of educational certificates. However, banning cryptocurrencies would rob the blockchain developers of a prominent use case for their skills, not to forget the several Indian crypto exchanges which would have to shut shop if the ban comes through.
To bolster its argument, the document cites the examples of countries such as Canada, Japan and Australia, among others, which chose to regulate cryptocurrencies, consequently giving a boost to job creation in the sector.
Robust Bank-Led KYC For Crypto
As part of its suggestions for a regulatory framework for crypto in India, the BuyUCoin draft document talks about the need for robust bank-led KYC (know your customer) as well as Anti-Money Laundering (AML) regulations to build compliance.
Rashmi Deshpande, partner at law firm Khaitan and Co also feels that KYC norms could help address the government’s concerns about cryptocurrencies. “Regulations would primarily be required when cryptocurrencies are traded as commodities. Specific KYC norms for cryptocurrency platforms for boarding traders should be put into place,” says Rashmi.
“Regulations around ICOs making the whole fundraising process more transparent would be helpful with a regulatory body like SEBI (Securities and Exchange Board of India) overseeing the process,” she adds.
ICO or initial coin offering is the crypto equivalent of an IPO (initial public offering). ICOs are used to raise funds. A company looking to raise money to launch a new coin, app or service, issues an ICO.
Self-Regulation For Crypto Exchanges
The BuyUCoin draft document also talks about a self-regulation charter in the short term, which could further a model code of functioning among all crypto exchanges in India.
Last month, Mumbai-based crypto exchange told Inc42 that major Indian crypto exchanges were working together under the aegis of the Internet and Mobile Association of India (IAMAI) to come up with a self-regulation charter. “We don’t want to further the notion that because there is no law, so crypto exchanges in India have a free hand. We have a draft version ready for our code of conduct and are updating the guidelines in line with the technology changes that have happened in the last few years,”
Bring Crypto Earnings Under Tax
The recent draft document also suggests bringing crypto earnings under the purview of tax. “This will allow Indian citizens to become active participants in the global blockchain economy and provide new revenue sources for the government,” reads the document.
It suggests that working professionals should have to claim their crypto earnings under a separate provision of the Income Tax Act. These suggestions in the document seem to be aimed at addressing the government’s concerns about cryptocurrencies being used for terror financing because of their decentralised nature. Requiring traders in cryptocurrencies to declare their crypto earnings for tax purposes would help weed out illegitimate and nefarious use cases of crypto.
Deshpande feels bringing crypto earnings under the purview of tax would be a welcome step.
“Considering the volumes being traded on a daily basis, clear tax regulations from the Income Tax as well as the GST perspective would only help the government generate more revenue in an ever-growing market,” she says.
The document also suggests that investors in the crypto industry could be enabled to claim dividends from the same with reasonable security policies such as pan card linkage and a minimum income.
Most importantly, BuyUcoin talks about the need for inclusion of cryptocurrencies in the Reserve Bank of India’s (RBI) Regulatory Sandbox. A regulatory sandbox is a scheme adopted in many countries to test emergent technologies with less stringent regulations and hence, the environment is more conducive for innovation.
Such an environment allows innovators to test their products and technologies, gain an understanding of their real-world implications and accordingly tweak their product before launching it on a larger scale.
In 2018, the RBI constituted a regulatory sandbox for fintech innovations, but banned cryptocurrencies for the same. Crypto industry experts and stakeholders have been urging the government to allow cryptocurrencies to work within the sandbox, which is a virtual space.
One of the anticipated benefits of opening the RBI sandbox to crypto-led innovations is that it would help widen the government’s understanding of cryptocurrencies. By showing that there are more positive than negative use cases of cryptocurrencies in India, the industry might just be able to convince the government to bring in regulation for good.
It is worth noting that BuyUCoin’s draft document has been prepared after numerous consultations with Indian crypto industry stakeholders. Inc42 has learned that the India chapter of the Government Blockchain Association (GBA) has partnered with BuyUCoin, and would take the suggestions mentioned in the draft document to relevant government agencies in the country. The GBA is an international nonprofit association that promotes blockchain technology solutions to governments all over the world.
As for BuyUCoin, the crypto exchange won’t stop here. In a whitepaper, it has proposed the launch of a sandbox, where crypto-based technologies can be tested. The crypto exchange feels that an open-source sandbox API (application programming interface) holds the key to solving transactional anonymity and KYC/AML concerns of regulatory bodies, as these concerns have long been a thorn in the side of the crypto industry in India.
ETH has completed its intraday upside movement of 580$$, but we expect this upside push will continue till 600$-610$ region, from there we can anticipate the downside push towards the 480-500$.
