~snip~
Thank you for detailed explanation. Yes I know income frome bounty and airdrops are also taxable but my concerned is about source of this income.
What can we describe as source of this income since we don't get any invoices etc.
It may be assumed that we are getting it from some illegal source or we are involved in money laundering etc. How can we safeguard ourselves from such possibilities?
Section 44AD and Section 44ADA is specially designed for small businessmen and professionals. According to the section 44ADA, if you show the profit more than 50% of your total receipts, you are discharged from maintaining books of accounts. So, for example, if you make Rs. 16,00,000 from bounties, campaigns, promotions, etc in a financial year. Then, you can simply say my profit from profession was Rs. 8,20,000 (more than 50%) and pay tax on this amount after taking deductions.
There are very less chances that Income Tax Department will poke you with notice if you are filing return under presumptive section (44ADA). But you need to take care of certain things:
1. Make sure you report the entire amount received in the bank account from bounty work as the income. (don't leave any)
2 Only send money to the exchange account (Zebpay, WazirX, etc) when you plan to sell the coins. Don't hold coins earned from bounties, etc on Exchange account where you have done KYC.
3. Don't, I repeat
don't club profits made from trading of cryptocurrencies with bounty income. Show bounty income separately as 'professional income' and trading income as 'capital gain'.
If you can follow all these steps then you are good to go and needn't worry about invoices, etc. However, there are indirect taxes implications too if you are earning over Rs. 20,00,000 from these sources. If that's the case, tell me and I will explain that as well.