Internal Revenue Service (IRS) has announced that Bitcoin will be treated as property, which means that Americans will have to pay tax when mining Bitcoin and on any capital gains from using the virtual currency while making purchases. The IRS also said that wages paid to employees using virtual currency are taxable to the employee and must be reported by an employer. This is also applicable to payments made to independent contractors and other service providers as well, although self-employment tax rules will be applicable here. Capital gains or losses from the use of Bitcoin will depend on whether the individual treated the currency as a capital (an asset used to make money and not something you own for personal consumption) asset or not. What is capital gain?: Let's say that you bought or mined Bitcoin when it was priced at $550 and today you decided to buy something for one Bitcoin, while the virtual currency has a value of $573. In this case, you have a capital gain of $23, on which you'll need to pay a tax. On the other hand, if you bought or mined a Bitcoin at it’s peak price of $1,200 last year and decided to buy something with it today, when Bitcoin is priced at $573, you will face a capital loss of $427. Americans can deduct this amount while filing tax returns. What does this mean for India?: Till now there hasn't been any official announcement from the Income Tax department, but members…
Digital Payments
US to treat Bitcoin as a commodity and tax it accordingly; Should India follow suit?
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