Key Takeaways:
- A crypto investor pays 3 INR instead of 9.5 million.
- What’s the story?
- India’s income tax law is NOT under revision after all.
YEREVAN (CoinChapter.com) – Paying taxes is no joke, especially when it comes to crypto income. The rules and regulations are often fuzzy, as a crypto reporter and trader Naimish Sanghvi found out the hard way. He shared his story online, urging people not to panic if they get a notice from the Income Tax Department (ITD). Here’s what happened.
Do NOT pay 9.5M Ruppees without a second glance.
Sanghvi claimed to have received an income tax notice that ordered him to cough up 9.5 million Indian Rupees he allegedly owned after crypto trading. However, a further dive into the issue revealed that the ITD considered only the Coindelta exchange, where the reporter sold the crypto, and not the exchanges where he bought it.
It was simple. I had bought crypto on Zebpay, Koinex and sold on Coindelta. But the officer only had data of Coindelta. So they saw that I had a profit of 90+ lakhs, but they didn’t know that I had purchased that crypto from another exchange.
clarified Sanghvi.
Eventually, the crypto reporter provided all the necessary details on his transactions, and the ITD concluded that Sanghvi owed the government only 3 INR tax on his crypto income. The reporter then shared a few tips with his fellow investors, who might have gotten a similar notice.
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These are the true highlights of the situation: 1. Do not panic if you get a notice from income tax department. It’s a process. 2. If you can, properly reply to the notices on time. Take help from CAs when needed. 3. Do not lie. If you did evade taxes, pay them.
concluded the crypto reporter.
India will review its income tax laws. Or will it?
Notably, Sanghvi shared his story amid a heated debate over income tax, as Prime Minister Narendra Modi planned to reform current tax laws to reduce widening income inequality. Or at least that’s what Bloomberg reported on April 18.
The report said the increase in capital gains tax was at the heart of the rework. However, India’s ITD later tweeted that there was “no such proposal before the government on capital gains tax.”
Meanwhile, India largely relies on indirect taxes gained from consumption rather than direct taxes on capital. Some experts cite the mentioned factor as the “main culprit” behind the country’s growing income polarization.
While the poor get left behind, India minted 70 new millionaires each day between 2018 and 2022, according to Bloomberg. Oxfam International estimates the top 10% of India’s population holds 77% of national wealth, and government data show about 6% pay income tax.
Modi’s predecessor already proposed an overhaul of the six-decade-old income tax law in 2009. However, successive governments have failed to complete it. Looks like Modi might not be the one to reform the income tax law either.
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Although the country has had a rocky relationship with crypto, taxpayers continue to invest their Rupees into the digital asset sector. Perhaps all crypto investors could benefit from giving income tax laws another glance, as did Naimish Sanghvi.
