Bitcoin is unique because no government or financial institutions can manage or control it. However, many people started tax evasion because of bitcoin’s features, and some started illicit activities by using this decentralized payment method. So the government notices that we cannot control and people are taking advantage of it, and instead of controlling or managing, the government can make the rules and restrict them to certain levels. When you obey the rules, you are safe, but if you break the regulations, you have to pay the penalty to the government.
So the government of India restricted bitcoin by taking steps so users would not show interest in a trade or mining bitcoins. We will take a look at this article. Check to visit the crypto engine to learn more about bitcoin trading in depth.
TDS Per transactions
The new bill passed in the Parliament in the budget states that every bitcoin user who will do bitcoin transactions, whether they will make a profit or suffer a loss, has to pay one percent tax. No one can escape from the tax now because the decision is very critical.
30% tax on your profit
You have to pay tax on every digital transaction through bitcoin. In addition, you are also liable to pay thirty per cent of your profit through bitcoin trading, investing, or any other gain from digital crypto assets. The government is doing this to decrease the bitcoin traders or miners so that they can use their home currency for any transactions.
No set off Losses
As we read two tax regulations recently proposed, the first is one percent TDS on each digital crypto transaction, and the second is thirty percent tax goes to the government that you made through trading or mining. But the third objection that makes these regulations too hard is no set of losses. In simple words, you are doing bitcoin transactions and paying TDS of one percent and thirty percent of tax from your trading or investing revenue without excluding the expenses of losses.
Suppose you have one bitcoin with the current value of $1,00,000, and you also have invested your cash in Dogecoin $1,00,000, which means your total investment is $2,00,000. After several months the price of the bitcoin you held rises by $50,000 means now you have a bitcoin worth $1,50,000, but on the other hand side, the cost of Dogecoin decreases by $50,000, which means you lost $50,000 in Dogecoin and make a profit of $50,000 in bitcoin. It means you have no loss and no profit, but according to the new taxation guidelines, you have to pay 30% of the profit you made means $15,000 (50,000*30/100). So you have not earned profit because of a break-even point, but you have to pay tax on profit whether you are losing in other crypto assets.
Indian Resident Tax System
Many people live outside India who thinks they do not have to pay tax because they will use the decentralized software bitcoin wallet, but you know the residential tax system of India. Suppose a person lives in India for over 182 days. In that case, he will be a resident of India and liable to pay the tax from his global earnings, whether he is making money from the business, job or cryptocurrencies.
Why is the government ruling hard for traders?
The main reason for ruling too hard to decrease this currency’s usability is that many people are misusing this digital currency. Millions of bitcoin traders in India are earning money from it, and according to the government, bitcoin is speculation. People do not want the traders to make money through speculation. Therefore, to restrict too much trading via various platforms, the government sets very rigid guidelines so people will spend money on the economy to grow.
Miners are also getting into Loss.
You know miners spend a lot of money on the mining resources such as electrical power, powerful computers, mining machinery hardware, mining software, graphic cards, cooling fans and other expenses. Still, they make money only 20 to 25 per cent of the total reward, and if they will give thirty per cent to the government, how can they manage the expenses. So miners will also quit the mining process and try a new method for making money digitally.