In India, gig workers have been using cryptocurrencies as a legitimate form of payment. According to multiple users and experts, software developers, content creators, and others who work with global companies use cryptocurrencies as a means of remittance rather than fiat currencies.
“There are two schools of thought. One is that you can’t take crypto as payment as the government doesn’t consider it legal tender. The second is that barter is allowed, so why not crypto? I belong to the second one,” said Naimish Sanghvi, CEO of Coin Crunch, a cryptocurrency media firm.
Sanghvi claims that he has been earning money from cryptocurrency for more than three years, long before he founded his company. He is still accepting cryptocurrency payments, but he says he needs to verify that additional compliances are in place to ensure that the correct tax amounts are paid.
Since 2018, a content provider claims he had been compensated in cryptocurrency. A chartered accountant (CA) who advises one of India’s largest crypto exchanges said he has received “many calls” from people who accept cryptocurrency payments and are attempting to figure out how to pay their taxes. According to the CPA, he has 50-100 clients that do business in this manner.
“What we see most of the time is that it’s either software developers or people like journalists, content writers, and marketing specialists who are providing services based out of India to multiple crypto projects based globally,” he said.
For a long time, crypto-based revenues have been widespread within India’s crypto community, according to industry insiders. Digital currencies such as bitcoin, ether, and tether are used by professionals (USDT). Companies don’t mind paying in crypto because they don’t have to worry about goods and services tax. It also helps them to avoid the 2-3 percent fee that they must pay when sending money internationally. Companies also seek to avoid the paperwork required to hire an international employee or freelancer.
The digital tokens are converted to money through a crypto exchange for small enterprises and freelancers in India. They then create invoices in their clients’ names with rupee amounts on them and pay taxes on them. “Most of them file taxes as consultants or people who are running one-man businesses,” said the CA quoted above.
However, the main reason people use cryptocurrency is to increase their income. Even with the recent market drop, the price of cryptocurrencies has skyrocketed in India. The argument for gig workers is that a $100 payment would yield around 7,000 dollars after fees, whereas a $100 USDT would yield about 7,600-8,000 dollars, depending on the price of the coin in India.
“There are certain basic principles that we follow. If you’re getting paid then that’s your income and you sell it immediately. If you want to hold it, you should book it as income and show the money as an investment,” said Sanghvi, who consulted chartered accountants to work out the particulars of taking crypto payments.
“The rule of thumb is that you have accrued income the moment you get it, even if it’s crypto. There is no provision in the law that says income is taxable only when you bring it in the form of INR. You have to pay tax the moment you get income,” said the CA.
These users have not been deterred by current regulatory ambiguity. Sanghvi and others claimed it’s only a matter of time, and that because they’re paid in crypto, it hasn’t hampered their ability to trade on exchanges.
Source: Hindustan Times