Is Bitcoin legal in India? Yes, you kinda say so because there are no specific rules in place saying or stating otherwise. But this cryptocurrency thing is a gray area in India, and you should learn a little more about the rules that are in place right here in India regarding that.
What’s The Current Legal Status of Bitcoin in India?
Well, the thing is, the legality of Bitcoin in India as well as many other nations around the world, is kinda a gray area. Yes, in India as well, there is no definitive or exact rule stating that this type of cryptocurrency is illegal or legal in India. The government has not opened the gates for the currency to be used like a common Rupee, thus the law cannot make it the same. This already makes potential users and investors feel confused. The Supreme Court pointed out in 2019 and asked the government to come up with a particular regulatory framework for digital currencies like Bitcoin. However, this pressure has not produced a decisive ruling or regulation on Bitcoin so far. All in all, since there is no specific rule stating that Bitcoin is illegal in India, that’s why you can assume that it is legal to use Bitcoin right here in India. But you must keep in mind that this can change at any time in the future, like the government might come up with some rules and regulations or actual laws regarding that which makes it illegal in the future. So watch out for that.
What Are Some Recent Government Statements and Policies Regarding This?
In the first place, the RBI made a try to stop banks from working with cryptocurrency companies and there were solid reasons behind that, so why not? Later on, the Supreme Court overturned this ruling and let banks in India service the cryptocurrency businesses again. Though, it was in the 2022 Union Budget that the government first made public tax regulations for digital assets which is a clear indication that it is moving toward proper cryptocurrency regulation. Also, the Government of India has proposed a bill known as the Regulation of Official Digital Currency Bill, 2021 which is designed to create a framework for the digital currency issued by the RBI and regulate private cryptocurrencies, for example, Bitcoin. But this bill is still to be passed and details are to a large extent still unclear.
And Most Importantly, What About The Taxation of Bitcoin in India?
You see, in the year 2022, something very major happened, they rolled out a 30% tax on Bitcoin and other digital assets in the country. No exemptions are made apart from the cost of acquisition; it has a strict application. With effect from July 2022, a TDS of 1% is also levied on Bitcoin sales aimed at tracking cryptocurrency transactions. The different ways of handling the tax of Bitcoin are based on how it was used; mining Bitcoin attracts a tax of 30% on mined income, on the other hand, if the Bitcoin is just held as an investment and later sold for a profit, that activity is taxed as the sale of capital assets.
