Hey I am sorry if this is a extremely noob question, but what if I buy btc from a site like paxful with UPI but never sell it then do I have to only pay tax in the year that I sell it? So just hodl-ing means no tax?
Yes. You don't have to pay tax if you are just holding Bitcoins. Tax is charged on income but buying Bitcoin doesn't generate any income. Income will be generated when you will sell the Bitcoins for profit. Thus the event will be taxable in the year when you will sell your holdings and make some profits. Make sure to show it as capital gains whenever you sell it.
Consider this image for further reference:
But what about taxes on conversions.......?
I mean if sold btc for tether i mean i hold coins like stable coins is those taxable or only income tranfered to the bank is taxable......?
I have another doubt if i brought btc for $5000 sold btc and hold some usd coins for example btc sold for $3000 and converted to usdt and hold stable coins for 6 months.
And brought btc for $4000 and sold for $20000 and which brought price should i show should i show $4000 or $5000....?
Thanks!