Taxontips
No Result
View All Result
Tuesday, November 28, 2023
Login/ Register
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Talk to an Expert
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
No Result
View All Result
Taxontips
No Result
View All Result

Can businesses accept or may payment in Crypto currency in India? Tax implication of doing transaction in cryptocurrency in India

ADMIN by ADMIN
December 6, 2021 - Updated on December 7, 2021
in Business & Other News
0
Cryptocurrency bill will be introduced in Parliament to ban other cryptocurrency in India
108
SHARES
1.4k
VIEWS
image_pdfPDFimage_printPrint

In the past 1-2 years we have seen a lot of growth in the cryptocurrency market in India and people are investing huge amount in cryptocurrency. However, in this post let’s understand what are the tax implications on business if they accept or make payment using cryptocurrency.

We shall understand tax implication under GST and Income tax, but first let’s make a small discussion about disclosure of cryptocurrency in Balance sheet as required by MCA.

Ministry of Corporate Affairs have asked to disclose the following details in relation to cryptocurrency or virtual currency:

Where the Company has traded or invested in Crypto currency or Virtual Currency during the financial year, the following shall be disclosed:-

  1. profit or loss on transactions involving Crypto currency or Virtual Currency
  2. amount of currency held as at the reporting date,
  3. deposits or advances from any person for the purpose of trading or investing in Crypto Currency/virtual currency.

To read more about MCA circular CLICK HERE.

Now let us discuss about the existing Income tax provision relating to accepting Cryptocurrency against sale of goods or service and making payment using cryptocurrency.

 

Making Payment using Cryptocurrency under Income tax:

Section 40A(3) of the Income tax act deals with making payment for any expense and same is reproduced as under:

“Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], exceeds ten thousand rupees, no deduction shall be allowed in respect of such expenditure.”

Other prescribed electronic modes are:

(a) Credit Card;

(b) Debit Card;

(c) Net Banking;

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(f) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer); and

(h) BHIM (Bharat Interface for Money) Aadhar Pay;

 

Thus, based on the above section if a person makes any payment above Rs. 10,000 in any other mode than the one’s prescribed above then such expense shall be disallowed from his business expenditure.

 

Accepting payment as Cryptocurrency under Income tax act:

Section 269ST of the Income tax act, deals with penalty while accepting payment and relevant extract of same is as under:

“No person shall receive an amount of two lakh rupees or more—

 (a) in aggregate from a person in a day; or

 (b) in respect of a single transaction; or

 (c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed”

Other modes prescribed in the section are similar to those mentioned above.

 

Hence, this section also states that if a person receives any payment above Rs. 2 lakh in any other mode then same shall be liable to 100% penalty of the amount received in such mode under section 271DA of the Income tax act.

Hence, one should not accept any payment in any other mode above Rs. 2 lakh.

 

Although both the above provisions were introduced with an intention to reduce cash transaction but it advisable to not use cryptocurrency in violation of above provision as same could attract penalty and disallowance.

 

Impact of accepting Cryptocurrency under GST:

Majorly Cryptocurrency is received as a payment when one provides goods or services outside India and there are various benefits in case of export of goods and services. However, to take those benefits one should fulfill various conditions as under:

“Section 2(6) of the IGST defines “export of services under GST” as the provision of any service that meets the following conditions:

  • Both the beneficiary and service provider is located outside India
  • Either one of them is not located in India
  • Both are not just foundations of an unmistakable individual supply of services having a place in Bhutan or Nepal, against payment in Indian currency, is absolved regardless of whether the payment is gotten in Indian currency taking a gander at the business approaches and patterns
  • The payment for such assistance has been obtained by the service provider in convertible foreign exchange.“

 

One of the conditions for a service to be considered as export of service the payment should be received in form of Convertible Foreign exchange.

As per FEMA regulations Cryptocurrency is still not covered under convertible foreign exchange and hence if you accept payment for export in cryptocurrency same won’t be eligible for benefit of export of service under GST.

 

Thus, based on the above discussion it is not advisable to do any business transaction in cryptocurrency until we have more clarification from the government.

 

This are just initial thoughts, one can comment if they have any other information and help others. Also, during the ongoing winter session a bill for cryptocurrency will also be presented which might bring more clarity on above topic.

 

Disclaimer: The views presented in the above article are personal views of our team (based on information available on public domain) and has no legal binding. For any legal opinion consult a tax professional.

 

You can book phone consultation/ assistance online with expert as mentioned below:

To book ITR filing with experts CLICK ME.

To book phone consultation with experts for any Income tax related matters CLICK ME.

To book consultation for Faceless Assessment with experts CLICK ME.

To book phone consultation with experts for GST related matters CLICK ME.

To book general phone consultation with expert CLICK ME.

 

Connect with us on: LinkedIn, Telegram, Instagram, Facebook and Youtube for regular Updates.

image_pdfPDFimage_printPrint
Tags: Cryptocurrency in IndiaGST updatesIncome tax updatestaxontips
Previous Post

Re-assessment Notice issued under old provision of section 148 after 01.04.2021 is void-ab-initio and quashed – Rajasthan High Court [Read order]

Next Post

Improvements in GSTR-1 return from 26.11.2021

Related Posts

Compliance due dates for June, 2020 | Compliance calendar for June, 2020 | 20+ compliances
Business & Other News

Statutory Compliance Calendar for November 2023 | Income tax, GST and various other laws

November 9, 2023
Compliance due dates for June, 2020 | Compliance calendar for June, 2020 | 20+ compliances
Business & Other News

Statutory Compliance Calendar for October 2023 | Income tax, GST and various other laws

October 6, 2023
GST registration
Business & Other News

₹1,62,712 crore gross GST revenue collected during September 2023; records 10% Year-on-Year growth

October 2, 2023
ICAI has announced a new MBA programme for Diploma in Management and Business Finance
Business & Other News

Extension of last date for payment of Membership /COP fee for the year 2023-24 to 31st October, 2023

September 30, 2023
MCA extends due date for uploading Annual return and Financial statement
Business & Other News

Clarification on holding of AGM and EGM through video Conferecnce (VC) or other Audio visual means

September 29, 2023
ICAI has announced a new MBA programme for Diploma in Management and Business Finance
Business & Other News

Multipurpose Empanelment Form (MEF) – 2023-24 | Now Open

September 20, 2023
Next Post

Improvements in GSTR-1 return from 26.11.2021

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Google Custom search

Recent Posts

  • CGST Delhi East busts a syndicate of 48 fake firms availing fraudulent ITC of over ₹199 crores in “Operation Clean Sweep”, 3 arrested
  • ITC reversal on account of Rule 37(A) by the recipient
  • Inoperative PAN resulting in TDS notice to deduct TDS at the rate of 20%. Here’s why?
  • Comparison between Section 115BAC before and after AY 2024-25
  • Advisory for the procedures and provisions related to the amnesty for taxpayers for filing appeal under GST

Recent Comments

  • Srinivasan Venkatasubramanian Venkatasubramanian on GST turnover limit for services increased to Rs. 40 lakh by CBIC?
  • Notification under PMLA by Ministry of Finance which could affect CA, CS and CMA - Taxontips on CA, CS and CMA now under PMLA. KYC of clients required
  • ITR 4 is now available on e-filing website for FY 2022-23 i.e. AY 2023-24 | File ITR with experts on Taxontips – Taxontips on Businessman with turnover below 1 crore and having profit below 8% need to compulsorily get books of accounts audited: Let’s find out
  • Can a person earning income from speculative business transaction file return u/s 44AD of Income tax act - Taxontips on How to calculate turnover in case of intra day and future and option trading for Income Tax purpose?
  • Extension of last date for updation of Member’s Profile with GSTIN at Self Service Portal – Till 23rd April, 2023 - Taxontips on Updation of Member’s Profile at Self Service Portal with GSTIN to get GST credit till 15.04.2023

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Browse Topics by Date

November 2023
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
27282930  
« Oct    
  • GSTR 9/ 9C extended : AGAIN

    GSTR 9/ 9C due date to be extended to 31.10.2020 | E-invoicing will be voluntary in the beginning

    6458 shares
    Share 2583 Tweet 1615
  • How to pay Membership and COP fees of ICAI for 2020-21 |

    6358 shares
    Share 2543 Tweet 1590
  • Code/ Nature of payment 6CR updated by NSDL in challan 281 for paying TCS on sale of goods

    5752 shares
    Share 2301 Tweet 1438
  • Are all the due dates of tax audit and Income tax return for FY 2019-20 extended to 31.03.2021 by the bill presented in Lok sabha Dt. 18.09.2020

    4772 shares
    Share 1909 Tweet 1193
  • SFT transaction mentioned in Form 26AS | What does it mean? | Who reports it? | SFT codes transaction type

    4000 shares
    Share 1600 Tweet 1000

Recent Notification

Income Tax department conducting the biggest raid of 2020 in Raipur!

CGST Delhi East busts a syndicate of 48 fake firms availing fraudulent ITC of over ₹199 crores in “Operation Clean Sweep”, 3 arrested

November 21, 2023
Further clarification by CBIC for claiming 20% ITC on invoices not available in GSTR – 2A. Circular 123/42/2019 – GST

ITC reversal on account of Rule 37(A) by the recipient

November 17, 2023

RSS Taxontips

  • CGST Delhi East busts a syndicate of 48 fake firms availing fraudulent ITC of over ₹199 crores in “Operation Clean Sweep”, 3 arrested
  • ITC reversal on account of Rule 37(A) by the recipient
  • Inoperative PAN resulting in TDS notice to deduct TDS at the rate of 20%. Here’s why?
  • Comparison between Section 115BAC before and after AY 2024-25
  • Advisory for the procedures and provisions related to the amnesty for taxpayers for filing appeal under GST
  • Statutory Compliance Calendar for November 2023 | Income tax, GST and various other laws
  • Advisory for Pilot Project of Biometric-Based Aadhaar Authentication and Document Verification for GST Registration
  • Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 in filing of Form No. 10-IC for Assessment Year 2021-22
  • GST revenue collection for October 2023 is second highest ever, next only to April 2023, at ₹1.72 lakh crore
  • ITR V showing invalid due to non-verification for income tax return filed by audited entities [AY 2023-24]

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Site menu

  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Taxontips

TaxOnTips provides you all tax related solutions in easy way and update you with its regular updates & notifications Visit us for details.
We are based in Jaipur, India

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

No Result
View All Result
  • Login/Signup
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • About us
  • Contact us
  • Ask an expert/ Talk to an expert
  • Q & A
  • Privacy Policy
  • Terms of use

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

Book Phone consultation with expert

Sitting home or at your office and don't have time to visit CA's office or don't know where to consult CA. Book your consultation with an expert practicing Chartered Accountant and get your query solved.

Book a phone consultation for 30 minutes with our expert at a very basic cost.

Book consultation

No thanks, I'm not interested!