Quote from: polynesia on September 06, 2015, 02:22:07 PM

Quote from: newtocryptocurrency on September 06, 2015, 01:24:41 PM

even if he were to pay tax on all 5 bitcoins at the price they were purchased and then capital gains tax on the 1 bitcoin he sold, how would he show the department where the money equivalent to the 5 bitcoins are? he has not sold some of them and so they are not in his bank account. Won't they ask him about it?

That is correct - tax on income from other sources (on the 5 bitcoins) and capital gains (on the 1 sold).
The IT department won't ask you where the money is. Even if they do, you have bitcoins to show for it.

How exactly does one show bitcoins? has anyone here got audited for this purpose? I don't even think any IT person would know about Bitcoin.

Is there an analogy to a non-bitcoin scenario in what I am trying to explain?

Quote

Theoretically, you could have earned 1 lakh and bought 5 bitcoins. This is no different.

But the thing here is that your passbook would show that you have "spent" 1 lakh as expenditure on something (buying bitcoin). But in the situation I explain, there is no INR involved for those 4 bitcoin. But tax is being paid.