How to Pay Tax on Bitcoin

Bitcoin is one of the earliest cryptocurrencies that constituted the worldwide peer to peer payment system that we know today. Cryptocurrency is digital money that can be bought and sold by cracking cryptographic conditions.

Cryptocurrency, especially bitcoin, uses the bitcoin robot, which performs automatic trades such as Bitcoin Loophole do automated trading and increases the user’s profits.

It is said to be more secure than real money due to complicated cryptographic functions that this system uses. It has no governing body or centralized system to monitor transactions between users. In other words, there exists no gatekeeper in such a payment system. 

History of Bitcoin

The first public record of Bitcoin goes back to October 2008, when a pseudonymous person or organization called Satoshi Nakamoto published the technical outline for this new and decentralized cryptocurrency.

In 2009, Bitcoin was the first cryptocurrency ever created. There has been a significant increase in the number of cryptocurrencies since the announcement of Bitcoin in 2009.

Some cryptocurrencies are Litecoin, Ethereum, Zcash, and Dash. Bitcoin was used only for private exchange for three years since its inception. WordPress became the first company major company to accept Bitcoin payments in 2012. 

Bitcoins in India

Bitcoins have begun to amass popularity in India in recent times, owing to the Government’s interest in moving towards a cashless economy.  

Currently, Bitcoin has neither been authorized nor regulated by the central authorities in India. As a result, there exist no concrete rules or guidelines to navigate the possible problems that can arise from the use of Bitcoins. However, it is vital to note that Bitcoins have not been declared illegal by the Government. Bitcoin is currently valued incredibly high.

If you’ve already taken the plunge and invested in Bitcoins, consider looking for a Bitcoin tax evasion Discount code to ease your taxes. There are a plethora of avenues you can look up while searching for your ideal Bitcoin tax discount code. 

The advantage of dealing with Bitcoins is independence from political influence and centralization. On the flip side, there is no way to deal with theft or fraud because transactions are irreversible. There is no way for the banks or a central server to undo your transactions. 

How Bitcoins are taxed in India? 

The government doesn’t seem to have set any tax rules on bitcoins yet. However, the levy of tax on bitcoins cannot be ruled out as income has always been taxed, regardless of its form. Therefore, one can only speculate. Consider the following scenarios: 

Scenario 1: Bitcoin Mining

Bitcoins created by mining are considered self-generated capital assets. Sale of such bitcoins would generally yield capital gains. However, it is essential to note that the cost of acquisition of a bitcoin cannot be determined since it is a self-generated asset.

Section 55 of the Income-tax Act, 1961, which explicitly defines the cost of acquisition of certain self-generated assets, does not cover self-generated assets via Bitcoin Mining. Therefore, we can assume that no capital gains tax would arise on the mining of bitcoins

Scenario 2: Bitcoins held as an investment exchanged for real currency

If bitcoins are held as an investment and are transferred in exchange for real money, the appreciation in value would yield long-term or short-term capital gains depending on the period of holding of the bitcoin. Long-term gains would be taxed at a flat 20% rate while short-term gains would be taxed at the individual slab rate.

How Bitcoins are taxed in the US? 

In the United states, crypto taxation and crypto assets are taxed the same way stocks are taxed. If you purchase a bitcoin and hold it for one year, you will have to pay long term capital gains when you sell it. 

Paying taxes on Bitcoin (or any other cryptocurrency) & Bitcoin tax Discount code 

Filing taxes can be tricky in general. However, when cryptocurrencies are added to the equation, the process becomes much more tedious. Many aspects of the crypto income and profits reporting are not yet clearly defined.

Consider choosing a crypto tax calculator to simplify your tax filing and be sure to look for a bitcoin tax discount code if applicable. There are several places at your disposal if a bitcoin tax discount code is what you are looking for. 

Best Cryptocurrency Tax Calculators

1. Zenledger

Zenledger is another tax calculation service provider for crypto investors. It enables users to import cryptocurrency transactions and calculate their capital gains and crypto-related income. When the transaction history is imported, the tool generates capital gains, income, donations, closing reports, profit and loss statements, and auto-fills tax forms. 

2. Libra Tax

Libra Tax is a universal calculator. The tool estimates capital gains and losses after analyzing the clients’ crypto-related activities. Its software connects to cryptocurrency exchanges like Coinbase and Bitstamp to track transactions.

Crypto taxpayers can use the Libra Tax calculator free of charge for up to 500 transactions. The paid subscription allows them to track 5,000. The premium service allows the user to download tax reports. 

3. Bitcoin Taxes 

It is one of the most popular tax calculators for cryptocurrency enthusiasts. The online platform allows users to import data on their cryptocurrency sales and purchase data throughout the year from several major crypto exchanges. 

Conclusion:

There you have it. The tax calculators mentioned above are only a few of many. If you are a cryptocurrency enthusiast or are planning to become one, remember to make use of a tax calculator and go for a Bitcoin Tax Discount code to simplify the process of paying crypto taxes.