Is Initial Bitcoin legal or not in India?
Robert 1. What is bitcoin?
Bitcoin is one of the earliest forms of cryptocurrency, forming part of the worldwide peer-to-peer payment system.
Cryptocurrency is digital money. It is considered to be more secure than real money. Cryptocurrency uses something called cryptography to secure its transactions. Cryptography, to put it in simple words is a method of converting comprehensible data into complicated codes that are tough to crack. Cryptocurrencies are classified as a subset of digital currencies, alternative currencies, and virtual currencies.
Bitcoin was the first-ever cryptocurrency created in the year 2009. Subsequently, there has been a rapid increase in the number of cryptocurrencies that have been created some of which are Litecoin, Ethereum, Zcash, Dash, Ripple, etc.
Bitcoins, in India, have slowly started gaining popularity, given the efforts of the government to move towards a cashless economy. However, one should know that bitcoins, as of today, are not centrally administered or regulated by any specific body like the RBI which administers physical currency in India. In fact, peer-to-peer transactions with bitcoins are managed using something known as blockchain technology which serves as a public ledger for all transactions.
2. Is bitcoin legal in India?
As earlier discussed, bitcoin to visa
, as a medium of payment, has neither been authorized nor been regulated by any central authority in India. Further, no set rules, regulations, or guidelines have been laid down for resolving disputes that could arise while dealing with bitcoins. Hence, bitcoin transactions come with their own set of risks. However, given this background, one cannot conclude that bitcoins are illegal as, so far, there has been no ban on bitcoins in India.
The Supreme Court of India has in its ruling pronounced on 25 February 2019 required the Government to come up with Cryptocurrency regulation policies. The matter had been adjourned in the hearing on 29 March 2019 and has been rescheduled for hearing in the second week of July 2019.
3. How are bitcoins taxed in India?
The concept of bitcoins being quite new to the Indian market, apparently the government has not yet brought the taxability of bitcoins into the statute books. At the same time, the levy of tax on bitcoins cannot be ruled out because the Indian income tax laws have always sought to tax income received irrespective of the form in which it is received.