Trading cryptocurrencies: 'Will I be liable to tax audit?'

Do you have any personal income tax query?

Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, will answer your queries.

Please mail your queries at getahead@rediff.co.in with the subject line 'Ask Mihir' and Mihir Tanna will answer all your tax queries.

Mohan Gangaramani: My son has NRE savings and FD account which is not taxed in India but he has to pay tax on it in USA. He prefers to pay tax in India, is it possible? Please respond.

Mihir Tanna: Interest earned on NRE account is exempt u/s 10 of Income Tax Act. If tax is paid and in the Income Tax Return form (ITR), such amount is shown under the schedule of Exempt Income, tax paid on said income will be refunded subject to prescribed conditions.

Akshay Kumar: I Am Trading Cryptocurrencies Recently. If My Receipts Of Sale Of Crypto Currencies Exceeds 1 Crore. Will I Be Liable For Tax Audit? Also Is There Any GST Applicable On Sale Of Crypto. Kindly Give Your Guidance.

Mihir Tanna: If Virtual Digital Assets (like Cryptocurrencies) are not held as Investment, it will be liable to tax as Income from Business and Profession. Further, in the absence of any specific exemption, in my view, tax audit provisions are likely to apply for turnover above Rs 10 crore, subject to fulfilment of other conditions.

GST on Cryptocurrencies is at proposed stage and not yet implemented.

Pranabananda Satapathy: Sir, I would be grateful if you could provide some clarifications regarding NPS. I am a salaried person. I am getting full tax benefit under 80C for PF and VPF. I am also getting benefit of Rs 50,000 by investing in Tier-I account of NPS. My employer has contributed Rs 2,45,941.40 in my NPS account in 2021-22.

Should I get tax benefit on my employer's contribution of Rs 2,45,941.40. Please answer.

Mihir Tanna: I understand that amount of PF and VPF is sufficient to claim deduction of Rs 1,50,000 u/s 80C and deduction of Rs 50,000 is taken under 80CCD (i.e. upper limit of deduction specified under both sections are taken); you will not be eligible for deduction for employers contribution.

JAYESH SHAH: Please reply all benefits that can be availed for a Proprietorship firm with the Proprietor being a SC (aged 60 years). Thanking you in anticipation of a prompt reply.

Mihir Tanna: Income tax provisions provide deduction of amount spent and exemption of income subject to prescribed conditions under several sections. However, certain additional benefits are given to senior citizen tax payers.

Like higher basic exemption limit of Rs 3,00,000; deduction on interest earned on saving account up to 50,000; higher limit for deduction of mediclaim and medical expenses of Rs 50,000; exemption from requirement of payment of advance tax if senior citizen doesn't have income from business and profession etc.

Note: The questions and answers in this advisory are published to help the individual asking the question as well the large number of readers who read the same.

While we value our readers' requests for privacy and avoid using their actual names along with the question whenever a request is made, we regret that no question will be answered personally on e-mail.