Reserve Bank of India (RBI) barred banks from dealing in cryptocurrencies, investors rushed to square off positions and sought advice on how much tax they should pay on returns made in FY18 and if they can do so before the July-end deadline.

The worry is that they may be left holding the virtual currency if they don’t sell it now and transfer the money into their bank accounts. They also fear a crackdown by tax authorities and other government agencies, experts said.

Some tax experts said returns from cryptocurrencies such as Bitcoin could attract 20-30% tax, depending on whether they are categorised as business income or capital gains.

“The income-tax department may consider trading of Bitcoins and other cryptocurrencies as capital gains or speculative income,” said Amit Maheshwari, partner, Ashok Maheshwary &Associates LLP.

3-month Deadline from RBI
“Speculative business income would attract about 30% tax,” he added. Tax experts said 20% long-term capital gains tax would be levied if cryptocurrencies were held for at least 36 months.