Table of Contents
WHAT HAPPENED RECENTLY?
- Tax notices slapped on cryptocurrency investors as trading hits $3.5 billion
- Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru and Pune.
- RBI has issued repeated warnings against digital currency investments, saying these were like “Ponzi schemes” that offer unusually high returns to early investors.
- But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month.
Value of bitcoin – 21/01/2018
- Bitcoin Prices Zoom 11% To Hit $12,823
- In Indian market(that includes bitcoins, and other digital currencies ) a bitcoin is priced at Rs. 8,49,996, while the bitcoin selling price is Rs. 8,25,000 on coinsecure.
Where does bitcoin come from or how is it generated?
- Mining – Mining is an activity where an individual (called the “miner”) uses his computer prowess to crack computationally difficult puzzles. The process of cracking such puzzles which are integral to the blockchain technology, help in maintaining them
- Purchasing them from a bitcoin exchange against real currency
- Receiving bitcoins in consideration of selling goods and services
How are bitcoins taxed in India?
- Bitcoins created by mining are self-generated capital assets
- Subsequent sale of such bitcoins would, in the ordinary course, give rise to capital gains. However, one may note that the cost of acquisition of a bitcoin cannot be determined as it is a self-generated asset.
- Further, it also not fall under the provisions of Section 55 of the Income-tax Act, 1961 which specifically defines the cost of acquisition of certain self-generated assets.
Tax
- Bitcoins held as an investment being transferred in exchange for real currency
- Long term gains would be taxed at a flat rate of 20% while short term gains would be taxed at the individual slab rate
- Bitcoins being received as consideration on sale of goods and services
- Can Black Money be converted to BITCOINS without the knowledge of the government?
- Over-the-counter trading of bitcoins
What are the major issues?
- India’s intelligence services have warned the government that such kidnapping, India’s first for-cryptocurrency violent crime — could mark the birth of a new national security threat.
- Rupees owned by criminal syndicates, drug traffickers, or tax-evaders, could now be turning digital.
Why is India using Crypto currency?
- Indians is following the global cryptocurrency boom in part because of the profits, but also because of the loss of faith in cash, as well as the flatlining of property and gold prices, caused by demonetization.
- Returns by Cryptocurrency is better compared to any other form of money and it’s a whole lot safer from tax raids.
- India is a small market for cryptocurrency, ranking 19th worldwide according to monitoring service Cryptocompare, with trades valued at ₹139,467,052.15, or a mere 0.5% by global value over the 30 days to November 21.
- ZebPay, India’s largest exchange, has reported its user-base has doubled in the last three months, while UnoCoin says its user-base has gone up from 100,000 to 500,000 this year.
Other cryptocurrency
- Multiple numbers of such currencies are used globally such as Bitcoin, E thereum, and Ripple.
- Bitcoins is one of the kinds of Crypto currency recently in news.
- Bangladesh: Bangladesh also followed suit in September 2014. The Bangladeshi central bank cited bitcoin’s lack of a central payment system as the reason behind the ban, which it believes would allow people to be “financially harmed.” Long story short — if you’re caught trading in bitcoin in Bangladesh, it could lead to legal trouble under the Foreign Currency Control Act of 1947 and the Money Laundering Control Act of 2012.
- Nepal: Though it might not be a well-known fact throughout the country, bitcoin is illegal in Nepal, according to Kedar Prasad Acharya, the deputy director of Nepal Rastra Bank.
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