Gig workers have started turning to crypto payments
Sanghvi said he has been getting income in crypto for more than three years, well before he started his company.
Gig workers in India have been using cryptocurrencies as legitimate means of remunerations. Software developers, content creators and others who work with global companies use cryptocurrencies as a medium of remittance, instead of going for fiat mediums, according to multiple users and experts.
“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 said he has been getting income in crypto for more than three years, well before he started his company. He continues to accept crypto payments now, but said he has to ensure that additional compliances are put in place so that the right tax amounts are paid.
A content creator said he has been getting paid in crypto since 2018. A chartered accountant (CA) who advises one of India’s larger crypto exchanges said he has had “numerous calls” with people who accept crypto payments and are trying to figure out their tax payments. The CA said he has 50-100 clients who do business this way.
“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.
Crypto-based incomes have been common among India’s crypto community for a long time, industry executives said. Professionals use digital currencies such as bitcoin, ether and tether (USDT). As global companies don’t worry about goods and services tax, they don’t mind paying in crypto. It also allows them to avoid the 2-3% cost they have to incur when making international payments. Companies also want to avoid the compliances needed to add an international employee or freelancer to their payrolls.
For small businesses and freelancers in India, the digital tokens are converted to fiat using a crypto exchange. They then raise invoices in the name of their clients, showing the rupee amounts and pay taxes on this. “Most of them file taxes as consultants, or people who are running one-man businesses,” said the CA quoted above.
However, the biggest reason for using crypto is that it boosts their income. Prices of cryptocurrencies in India have been skyrocketing, even after the recent market correction. The rationale for gig workers is that the income from a $100 payment, after the requisite fees, would be approximately ₹7,000, while the income from 100 USDT would be about ₹7,600-8,000, 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.
The recent regulatory confusion hasn’t deterred these users. Sanghvi and others said it’s a temporary period and as they get paid directly in crypto, it hasn’t affected their ability to trade on exchanges.