Cryptocurrency is a relatively new concept in the Indian market. The government is yet to come up with specific rules for the taxability of profits derived from cryptocurrency transactions under the Act. However, since the intent of income tax laws has always been to levy tax on income regardless of its type, levying tax on cryptocurrency cannot be avoided solely because of the form of income in which it is collected.

Before deliberating on the determination of tax implications of income generated through crypto trading, it is pivotal to understand that any gains derived from any transaction in cryptocurrencies face two slabs of classification under Income Tax. Either it can be classified under capital gains or business income. This knowledge is essential to have as the foregoing classification will decide as to which particular tax return form has to be filed and what would be the tax levied on gains derived from the sale of such cryptocurrencies.

The government has extended the deadline for filing of returns for AY 2020- 21 from 31 March 2021 to 30 May 2021. Pursuant to both old and new Income Tax slabs, individuals having an annual income (Net taxable income) of more than Rs 2.5 lakh have to file Income tax returns (ITR).

Highly encouraged and driven by the rally of Bitcoin in 2017 and in the wake of the Supreme Court lifting the ban on cryptocurrencies by setting aside the notification of the Reserve bank of India, numerous investors to make windfall gains started investing in cryptocurrencies. 

As mentioned above, the classification of capital gains and business income helps in determining your ITR. Under Section 2(14), IncomeTax Act, 1961, a capital asset is defined as a property possessed by any person, irrespective of any connection between the property and his business/profession. Though there is no statutory meaning associated with the term ‘property’, every possible interest which a person can enjoy or acquire is signified by it.

Primarily, if the purpose of transaction in cryptocurrencies is an investment, then it would be deemed as capital assets. Therefore, any gains from such transaction or transfer of crypto must be taxed under the header of capital gains.

Nevertheless, if the transaction happens frequently and is substantial, it could be regarded as trading and therefore, the income in such case would be deemed under business income as evidenced by the statement of Naveen Wadhwa, DGM at Taxmann. “It is interesting to note that in India, there are no businesses that deal in cryptocurrencies. There is a possibility of you finding brokers or investors who frequently deal in equity and commodities; however, you would not find any broker holding a portfolio of cryptocurrencies,” remarked Wadhwa

As understood from above, any gains from transacting in virtual currencies are deemed to be taxable as capital gains. Now, it is important to look at the period (time) of holding. Long-term capital gains (LTCG) are taxed on gains held for 36 months or longer, while short-term capital gains (STCG) are taxed on gains held for less than 36 months.

STCG are taxed as per the individual taxpayer’s slab limit. LTCG, on the other hand, are levied at a flat rate of 20%, with indexation.

Individuals with taxable income of more than Rs 50 lakh must fill out Schedule AL in ITR forms, which includes details about mutual funds and shares like cryptocurrencies. Furthermore, if a corporation or a partnership firm invests money from their business into a cryptocurrency, they must report it on their balance sheet to comply with accounting principles. ITR-2 and ITR3 are acceptable tax forms for people who have capital gains or business profits from cryptocurrencies.

Interestingly, cryptocurrency generated through the medium of mining comes under self-generated assets. If the classification is considered, then such transactions would usually amount to capital gains. However, the cost of acquisition in case of acquiring any cryptocurrency cannot be determined. It does not fit under the ambit of Section 55, Income Tax Act, 1961 as it only covers the cost of acquisition of self-generated assets. Also, no capital gains calculation process will be consistent with the Supreme Court’s decision in B.C Srinivasa Shetty’s case. As a result, no capital gains tax will be levied on income through cryptocurrency mining.

Quite contrary to the aforementioned view, if IT authorities do not deem cryptocurrency to be a capital asset, capital gains tax would not be applicable. As a result, it would have to be charged under the residual head of revenue, “Income from other sources.”

Since the full purchasing value of cryptocurrencies can be claimed as a deduction under Section 57 of the Act, the tax will be paid at an individual slab rate only on the benefit and not on the selling value.

WAY FORWARD

Nonetheless, several experts believe that a centralised framework should be formulated by the Central government in coordination with the country’s central bank because not only are people unaware of and confused about filing taxes on income earned by crypto trading but even the income tax authorities are in a quandary about it. When the enforcing authority is perplexed, it is extremely difficult for those in the trading profession to follow the rules. However, some professionals, such as WazirX’s Patel, claim that cryptocurrencies should be treated as capital assets and should therefore be reported when filing tax returns.

Another Charted Accountant from Mumbai, who wishes to remain anonymous, told Gadgets 360 that people should declare it as income from other sources and pay a flat 30% tax rate. It is not a legal and legitimate form of currency, according to the same CA, and should therefore be included under the 30% category.

There is no regulatory certainty and other than the notifications, there has been no clarification on how the government wants to tax cryptocurrencies. Instead of outrightly banning it, the incumbent should be oriented towards better regulation and a lucid framework for taxation. Therefore, the only way to remove ambiguities is to pass umbrella legislation on the subject.

Miheer Jain is a research assistant at Infinite Sum Modelling Inc, while pursuing legal studies at NMIMS School of Law, Mumbai. Dr Badri Narayanan is the founding director of Infinite Sum Modelling (ISM), Seattle and a senior economist with University of Washington, Seattle.

The Centre on Tuesday said that mixing of Covid-19 vaccines is not protocol yet and asserted that there is no change in the schedule of two-dose vaccines Covishield and Covaxin. The clarification came at a time when several states have initiated a graded unlock process with Covid-19 cases on a steady decline.

Briefing a press on Covid and vaccination-related updates in the country, Chair of the National Expert Group on Vaccine Administration for Covid-19 (NEGVAC) and Member (Health) in NITI Aayog, Dr Vinod K. Paul, said: “We have heard that, it is being said that now only one dose of Covishield would be given. I would like to clarify that only two doses of Covishield are scheduled in India. After the first Covishield dose is administered, the second dose will be given after 12 weeks. There is no change. Covaxin also has two doses’ schedule, second dose to be administered in 4-6 weeks.”

“Second thing which has come is the mixing of the vaccine. Mixing of vaccine is not the protocol yet, the same vaccines (Covishield and Covaxin) to be administered for both doses. Stick to the SOP,” he added. “There is international research underway on the mixing of vaccines as the possibility of a positive effect is also plausible, but a harmful reaction cannot be ruled out either. It is an unresolved scientific question, science will settle it,” he added.

Earlier, Dr N.K. Arora, Chairman of Covid-19 working group under the National Technical Advisory Group on Immunisation (NTAGI), said that India may in few weeks start testing the feasibility of a regimen that mixes two different doses of Covid vaccines to see if it helps boost the immune response to the virus. The mixing of vaccine of Covid-19 has been discussed at the Covid-19 group, NTAGI and National Expert group on Covid-19 Vaccine Administration (NEGVAC).

Dr Vinod K. Paul’s clarification came even as the coronavirus outbreak in the country seems to be mitigating as the number of fresh Covid-19 infections is declining. The states and the Union territories with a falling graph of Covid-19 cases have begun the unlocking process. Delhi, Uttar Pradesh, Jammu and Kashmir, Madhya Pradesh and Himachal Pradesh are some states on this list.

On the contrary, states such as Maharashtra, Goa, Odisha, Telangana, Sikkim, and Kerala have continued with the lockdown as the infection rate and mortality rate is still high in some districts.

Though there are a few states with high numbers, the overall country’s infection statistics are falling. According to Health and Family Welfare Ministry’s information, 152,734 new cases have been reported in the last 24 hours which is the lowest single-day rise in the last 50 days. The daily positivity rate is 9.07 per cent which is less than 10 per cent for the seventh consecutive day.

Delhi government has initiated the unlocking process on May 3 as the positivity rate has come down to 1.5%. The government has relaxed a few restrictions there. However, the other curbs will continue till 7 June. It has given a green light to the manufacturing and construction business. However, they have to follow strict Covid-19 guidelines at the workplace. Chief Minister Arvind Kejriwal has stated that, if the cases start surging, the unlock process will be halted. He said, “We have to maintain a balance between controlling the spread of Covid-19 and allow economic activities.”

Maharashtra is still struggling to lower its Covid-19 infection rate. The state government has extended the lockdown till June 15. However, it has relaxed restrictions in the districts with fewer Covid-19 cases. The government has permitted the non-essential shops to operate in Mumbai on alternate weekdays from 7 am to 2 pm. These shops will remain shut during the weekend.

Except for 20 districts, the Uttar Pradesh government has eased the restriction in the rest of the state. However, the night curfew and weekend lockdown will continue throughout the state. In 55 districts, with less than 600 cases, the shops outside the containment zone have been permitted to operate during weekdays. Private businesses can function with limited staff and the government offices will open with half capacity.

Karnataka is under lockdown till 7 June. However, the state›s Covid-19 Technical Advisory Committee (TAC) on Monday has recommended the state should continue the lockdown, placing lives before livelihood.

The Madhya Pradesh government has announced that the «corona curfew» will last till June 15. As per the guidelines, not more than 20 people can attend a marriage ceremony. The number of people allowed at a funeral procession is 10. Only four people can gather at a religious place.

Kerala Chief Minister Pinarayi Vijayan has extended the lockdown till June 9 with a few relaxations. He stated that all industries can function with minimal staff. Banks will operate on Monday, Wednesday, and Friday. Most other states have announced the “unlock” in the first half of June.

WITH AGENCY INPUTS

If you stay in Delhi, you won’t have to go out now to get liquor. It will be delivered at your doorsteps. The Arvind Kejriwal government has allowed home delivery of liquor through mobile app or online web portal.

The Delhi Excise (Amendment) Rules 2021 has been introduced. In the Excise (Amendment) Rules 2021, L-13 license holders will be allowed to deliver liquor to people’s homes.

As per the new rules, only those with L-13 license will be able to make home delivery of Indian liquor and foreign liquor. For this, the order can be taken on mobile app or online web portal. Two, delivery will be done at homes only after receiving the order. No alcohol will be delivered in hostels, offices or any other institution. Three, restaurants, clubs and bars associated with hotels will be able to serve liquor in open spaces.

There was no complete ban on home delivery of liquor in Delhi. Till now, the rule was that shops with L-13 license could deliver liquor to homes provided the order was received through email or fax.

But now the notification says, “The licensee will also be able to make delivery of liquor to homes on receipt of orders through mobile app or online web portal”.

After Chhattisgarh, Delhi is the second state to start home delivery of liquor. The government’s argument is that this will not crowd the liquor shops in the Covid-19 era.

The Supreme Court had also made a comment last year that states should consider home delivery of liquor, as crowds outside liquor shops often found ignoring the social distancing norms. After this, liquor shops were closed again in Delhi as soon as the second wave of Corona arrived. Now regarding this decision, the Delhi government believes that this will reduce the crowd at the liquor shop.

The BJP is opposing this decision of the Kejriwal government. MP from the national capital Ramesh Bidhuri said, “There is a plan by the Kejriwal government to make alcohol reach the doorstep, it is an attack on the culture of India. There is a plan to ruin the coming generations. Our culture is such that a person thinks four times before going to a liquor shop; now with this decision, liquor will come to him.”

In what can be seen as a message to China, India today stressed the need for every single nation “to respect territorial integrity”. The remarks to this effect were made by External Affairs Minister S. Jaishankar at the BRICS meet which was held virtually on Tuesday to discuss the challenges resulting from the Covid-induced pandemic. Delhi got a shot in the arm as BRICS, a group of Brazil, Russia, India, China and South Africa, backed India-South Africa joint proposal for Covid vaccine patent waiver at the World Trade Organisation (WTO).

MEA officials see BRICS foreign ministers’ meet as a significant development auguring well for India’s various diplomatic missions. First, the Indian foreign minister managed to use the forum to send out a strong message on territorial integrity, with China being an elephant in the room.

“We strive for a fair, just, inclusive, equitable and representative multipolar international system, based on international law and the UN Charter that recognizes sovereign equality of all States and respects their territorial integrity,” Jaishankar said. The EAM’s remarks on ‘territorial integrity’ assume importance in the backdrop of the India-China border dispute of 2020. Chinese Foreign Minister Wang Yi was also in attendance at the meet.

Second was India’s diplomatic effort to get the backing of BRICS nations on its joint proposal with SA seeking patent waiver for Covid vaccine. Third, India also put out in a very candid manner the need to reform multilateral forums such as UNSC of which Delhi wants to be a permanent member. Russia and China are the two members of BRICS which are permanent members of UNSC. While Russia has always been supporting India’s effort to get a permanent seat in this UN body, China blocked it. So, with the joint statement of BRICS mentioning the need for reforms in UNSC and other international multilateral bodies, India is said to be in a position to step up pressure on Beijing for its UNSC ambition.

Last but not the least, India also succeeded in attracting BRICS attention on Afghanistan which came as part of agenda of countering terrorism. Jaishankar aggressively underlined the need to deal strictly and effectively with UN proscribed terror organisations for the lasting peace in Kabul. BRICS members supported it in one voice. What is significant is that Russia and China are the two BRICS countries which are active in Afghanistan, with Dragon unwilling to accept India’s role there.

MEA sources say that it is an important achievement for India that BRICS released “BRICS Joint Ministerial Statement on Strengthening and Reforming of the Multilateral System”. The joint statement said that they “recommitted to instill new life in the discussions on the reform of the UN Security Council and continue the work to revitalize the General Assembly”. The statement not only focuses on reforms at the UN but also International Monetary Fund (IMF), World Bank (WB), World Trade Organization (WTO), World Health Organization (WHO).

Meeting under the chairmanship of India, the BRICS countries also laid out a list of changes that would make these institutions examples of effective and representative multilateralism. Among those who attended the meeting hosted by Jaishankar were Chinese foreign minister Wang Yi, the Minister of Foreign Affairs of the Federative Republic of Brazil, Ambassador Carlos Alberto Franco França, the Minister of Foreign Affairs of the Russian Federation, Sergey Lavrov and the Minister of International Relations and Cooperation of the Republic of South Africa, Grace Naledi Mandisa Pandor.

Meanwhile, Chinese Foreign Minister Wang Yi commended India for its vigorous efforts to hold this year’s BRICS summit despite the Covid-19 outbreak, as he offered Beijing’s support and assistance to New Delhi to combat the pandemic. “At this trying time, China stands in solidarity with India and all BRICS countries. As long as it is needed by India, I believe that all BRICS partners including China will provide further support and assistance at any time and we are fully confident that India will certainly overcome the pandemic,” Wang said.

Ending the continued anxiety among students and parents, the Centre on Tuesday decided that the Class XII board examinations of CBSE would not be held this year in view of the “uncertain conditions due to Covid-19 and the feedback obtained from various stakeholders”.

The decision to cancel the examinations was taken at an important review meeting chaired by Prime Minister Narendra Modi.

“It was decided that Class XII board exams would not be held this year. It was also decided that CBSE will take steps to compile the results of class XII students as per a well-defined objective criterion in a time-bound manner,” a statement from the Education Ministry read.

However, it was also decided that like last year, in case some students desire to take the exams, such an option would be provided to them by CBSE, as and when the situation becomes conducive.

According to the statement, CBSE officials gave a detailed presentation on the wide and extensive consultation held so far and views received from all stakeholders, including state governments

The meeting was also attended by Union Home Minister Amit Shah, Defence Minister Rajnath Singh, Finance Minister Nirmala Sitharaman and secretaries of School Education & Higher Education Departments and other officials.

Taking to Twitter, the Prime Minister said that the decision on Class 12 CBSE examinations has been taken in the interest of students. He stated that Covid-19 has affected the academic calendar and the issue of the board examinations has been causing immense anxiety among students, parents and teachers, which must be put to an end.

“Students, parents and teachers are naturally worried about the health of the students in such a situation. Students should not be forced to appear for the examinations in such a stressful situation,” PM Modi said.

He stressed that the health and safety of students “are of utmost importance and there would be no compromise on this aspect”, and added that in today’s time, such examinations cannot be the reason to put the youth at risk. The Prime Minister said that all stakeholders need to show sensitivity for students, and directed officials to ensure that the results are prepared in accordance with well-defined criteria, in a fair and time-bound manner.

Referring to the wide consultative process, PM Modi expressed appreciation that a student-friendly decision has been reached after consulting all stakeholders from across the length and breadth of India. He also thanked the states for providing feedback on this issue.

Earlier, on 21 May, the PM also held a high-level meeting on the same, which was followed by another meeting held under the chairmanship of Defence Minister Rajnath Singh two days later, wherein various options for conduct of CBSE examinations were discussed in the meeting and feedback obtained from the states and UTs. Several state governments like Delhi hailed the Centre’s decision to scrap the examinations, saying that it ends a big concern about health risks for children.

Vinay Agarwal, a student, said; “Many students like me were expecting a decision like this only. The decision to hold examinations could have proved detrimental to the health of students and teachers.” WITH AGENCY INPUTS

On Tuesday, reacting sharply to reports about the replacement of Chief Secretary in Jammu and Kashmir, former Chief Minister Omar Abdullah said J&K administration is divided between two Chief Secretaries.

Former Chief Minister Omar Abdullah took to Twitter and said, “Two Chief Secretaries in J&K, an administration split between loyalists of the outgoing CS & others who want to get on with their work but can’t figure out what’s going on. So much for good governance & accountability”.

Recently general administration department of the J&K government issued a government order asking all the administrative secretaries to address all the files to the new chief secretary Arun Kumar Mehta.

This government order evoked a lot of political reactions and most of the politicians in Jammu and Kashmir have sensed that the former chief secretary does not want to move out of Jammu and Kashmir.

One of the journalists in his tweet on this development of two chief secretaries working in Jammu and Kashmir said, “#J&K Today | Aik Vidhan, Aik Nishan & 2 Chief Secretaries | Outgoing CS still retains a car with CS flag, attends meetings chaired by LG & new CS, continues operating from CS office leaving Arun Mehta with no option but to operate from FC office. Is this Good Governance or Arrogance?”

Outgoing chief secretary B V R Subrahmanyam is continuing in his office even as he stands transferred as OSD in the commerce department and would be finally appointed as the union secretary commerce. Subrahmanyam has even attended all the recent meetings held by Lt. Governor Manoj Sinha not only fueling rumors but also surprising the bureaucrats of how to behave with these two chief secretaries.