Is Cryptocurrency Banned in India – Crypto Regulations, Trading, Taxes, and the Latest Update will be discussed here. In today’s article, we are going to answer all your questions Is Crypto banned in India? Are Cryptocurrencies legal tender? Is it a valid currency in India? Cryptocurrencies might be popular in India, but even most of us are not clear about these questions. If we were to buy a bunch of cryptocurrency on an exchange in India, would we be breaking the law? How will the income from that trade be taxed? So to get all the answers to these questions stay tuned with us and read this informative article ahead.
Is Cryptocurrency Banned in India?
Firstly, you must know what is Cryptocurrency. It is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the goods or services that the company provides. Cryptocurrencies work using a technology called a Blockchain. A Cabinet note circulated by the government on the proposed cryptocurrency bill has suggested regulation of private cryptocurrency rather than banning it. The note also says that crypto will not be recognized as a legal currency in India. Further, the legislation describes Cryptocurrency as Cryptoasset, according to the note.
The legality of cryptocurrency in India has been more or less grey. The country actually has an expanding blockchain market that dates back at least five years. However, the legal fight over cryptocurrencies began in 2018. It has so far involved billion-dollar companies, government officials and ministers, courts, and crores of investors in the business of Crypto.
Is Crypto Illegal in India?
Actually, Cryptocurrency has never ever been banned in India. The confusion behind this comes from a couple of moves made by the Reserve Bank of India (RBI) in 2018. It all started with an official directive the RBI issued to banks and financial institutions. Within the notification, the central bank told these institutions to stop doing business with cryptocurrency exchanges. RBI’s ruling applies to banks and institutions, it said nothing about people owning cryptos.
In May this year, the RBI sent an informal note to banks asking them to be careful of crypto exchanges. Because of that many banks began to withdraw services from crypto exchanges overnight, and platforms had to stop taking deposits in Crypto temporarily. Things were resolved in less than a month, but some banks remain wary and do not allow people to deposit money in crypto exchanges.
Are Cryptocurrencies Legal Tenders?
Cryptocurrency is not owned or controlled by a country or bank. It is not issued by a central bank of the country (in our case RBI) as legal tender. Neither the cryptocurrencies are recognized by the government as legal tender nor they are regulated by RBI. Currently, there are no laws that prohibit trading in crypto. So basically it is more like any other asset such as gold or real estate. People used to trade in gold, without the government creating any law for it so the same is the status for cryptocurrency right now.
Is Crypto Valid Currency in India?
It isn’t a valid currency because you cannot buy or sell anything with cryptocurrency in India. Crypto is minted across the world by a complex decentralized, peer-to-peer powerfully coded system. It can only be traded online within the country. Cryptocurrencies are digital currencies and are valid as an asset class in India. Anything about Cryptocurrency Banned India will be concluded only after the final resolution of the Cryptocurrency Regulation Bill 2021-2022 in Parliament.
Prime Minister on Crypto Ban India
Whether the Indian government supports the crypto ban in India or not, there is just too much going on in the field for it to continue to turn a blind eye. India’s Prime Minister Narendra Modi presided over a conference earlier this month to examine the future of cryptocurrencies and cautioned against bitcoin slipping into the wrong hands. The Centre has also said that it intends to modify income tax regulations to bring cryptocurrency earnings within the tax net.
PM Modi offered a severe warning only a week ago at a session held by the Australian Strategic Policy Institute. “All democratic countries must work together on it to guarantee that it doesn’t fall into the wrong hands, spoiling our youths,” he added.
India working on its own CBCD (Central Bank Digital Currency)
- RBI announced that it was developing its digital currency, the Central Bank Digital Currency (CBDC).
- A CBDC is a digital form of legal money issued by a central bank.
- It functions similarly to fiat money and may be exchanged for fiat money in a one-to-one ratio.
- CBDC is a digital or virtual currency, but it differs from the private virtual currencies that have increased in the recent decade.
- According to RBI deputy governor T Rabi Sankar, the historical idea of money is at variance with private virtual currencies.
Do you have to pay Taxes on Crypto in India?
You have to pay tax on any kind of income of profit in India, and income from trading in crypto assets is no different. At the moment, there is no specific guidance in the Income Tax Act for taxing income from crypto trading. However, many experts recommend that profits from cryptos should be reported in the income tax return (ITR) as capital gains.“The income earned by crypto exchanges and other crypto service-providing platforms is liable to tax under the head Business or Profession under Chapter-IV of the Income-tax Act, 1961. Applicability of tax rate will depend on status and category of taxpayer,” Sitharaman explained during the ongoing session of Parliament on November 30.
Bitcoin Legal or Banned in India?
The father of all cryptocurrencies is Bitcoin. It was initially started by anonymous user Satoshi Nakamoto in 2009 and it is often regarded as the most acceptable investment of the previous decade due to its meteoric ascent. The coin, which started at roughly 10 cents, was trading for over $60,000 until last week. But you cannot use Bitcoin to buy things in place of the Indian Rupee (INR). The government doesn’t recognize the asset as legal tender, much like the rules in the US, UK, and most other countries worldwide.
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