Is bitcoin taxable or not?
It is difficult to say whether bitcoin is taxable because in some countries, bitcoin is taxable, and in some countries, there are no rules for bitcoin. Some countries banned bitcoin because it is a decentralized system that means the government cannot control the bitcoin and cannot trace and charge tax for bitcoin transactions. So it is a confusing question whether bitcoin is taxable or not. This article will discuss the possible taxable rules about bitcoin and who is responsible for paying tax under bitcoin. So without wasting time, let’s understand whether bitcoin is taxable or not.
Some countries banned bitcoin because bitcoin is a decentralized system. No one can control bitcoin, such as the government, banks, financial institutions, president of the country, or even the founder of bitcoin because the primary purpose of bitcoin at the time of starting was to make a separate currency that no one could control. The government has banned bitcoin because they cannot track the records of bitcoin transactions and buying and selling through bitcoin. It was complicated to track the history because your identity on bitcoin is anonymous, and you can charge your wallet multiple times.
COPYRIGHT_WI: Published on https://washingtonindependent.com/is-bitcoin-taxable-or-not/ by Stefano Mclaughlin on 2021-10-12T07:19:43.383Z
Yes, Bitcoin mining is taxable. Bitcoin is now on the exchange that means it is now a separate global currency and accepted worldwide except in some countries. Mining is the process of validating the bitcoin transactions for the smooth running of bitcoin. After successfully validating a block, you will get a reward of 6.25 BTC that is 2,74,398 US dollars, when writing this article. It is a considerable amount, and you have to pay taxes to the government. If you are earning money through mining for personal use, you have to pay tax, and you have to report to the government of your mining making and the cost of acquaintance.
If you buy bitcoin or other cryptocurrencies for investment purposes, you have to pay tax to the government. First, you have to pay the capital tax that will levy on the profit of the investment. For example, suppose you have invested $1,00,000, and after five years, it becomes $2,00,000, which means your gain is $1,00,000. Then, you have to pay a capital tax of $1,00,000 according to the different slabs. The Tax slabs may vary according to the country's rules and regulations. If you hold bitcoin for long-term investment to earn a future profit, it will be levy under the capital gain, and you have to pay income tax.
Bitcoin Investment and trading are two different terms. Investment means buying and holding bitcoin for the long term, representing more than five years for earning, and trading means purchasing and having bitcoin for short periods, i.e., for hours, days, weeks, or months or not more than once a year. In simple words, trading means buying bitcoin at the market price, and when the price increases, sell them for profit. You are earning money, which means your income and income tax will be levy when you profit through bitcoin trading; for more information, learn at Bitcoin System. You have to pay the tax on trading because you are earning a profit under the tax slab of income tax.
More than 1,60,000 merchants or vendors accept bitcoin payments and millions of bitcoin users who want to buy products and services paying through bitcoins. Many new businesses and startups, whether offline or online, accept bitcoins to expand their business. But the question is, do they need to pay tax for accepting bitcoin payments? Yes, if you are running a business and accepting bitcoins as a payment, you are earning money through your income or profit through your business. You have to pay income tax or tax levied on the business income according to the tax slab in your country.
Always remember bitcoin is a decentralized system that means no one controls it, which means you are not liable to pay tax. Many exchanges provide third-party services for converting bitcoin into fiat currency. When you do transactions in bitcoin currency, there is no tax, but when you convert bitcoin into your local currency and have gained profit, you have to pay tax on your profit. So remember that tax will only levy when you convert your bitcoin into local currency; otherwise, no one will force you to pay tax.