Diwali is about to come and celebrations are going on. It is also the season of gifts. While the options are abundant in the market, what if you are thinking of giving cryptocurrency as a Diwali gift this time?
Top digital coins like bitcoin are all the rage despite their volatile nature. Even the recent collapse in the crypto market could not stop the enthusiasts from taking the plunge. Cryptocurrencies are a good investment for many people and they can easily be seen as an alternative to cash, allowing you to buy goods and services online. Thus, gifting cryptocurrencies makes sense to many, and if you are one of them and live in India, there are a few rules you need to know.
As both the sender and recipient of the gift, you need to take into account the taxability of cryptocurrency. While the Reserve Bank of India has repeatedly shown disapproval of the crypto-driven market, the high volume of cryptocurrency trading has prompted the Indian government to consider digital coins. But not without rules. The rule includes a fixed tax that the government charges on each transfer of cryptocurrency.
As per the guidelines laid down by the Income Tax Department, any amount received is taxable. Essentially, gifts in excess of a certain limit will attract tax. The guidelines also mention that specified movable properties and immovable properties will also be taxed as per rules. Since cryptocurrencies are considered movable assets, the government applies the same rules to it. The rule states that assets exceeding Rs 50,000 will be considered for taxation.
Simply put, cryptocurrency gifts worth Rs 50,000 or less will be exempt from taxation, while anything over that limit will be taxable. However, this is not true of gift vouchers given to employers. If the value of the gift voucher or cash is less than Rs 5,000, then it is not taxed, otherwise the government levies the tax.
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