Updates

Legality of Bitcoins in India

Bitcoin is a form e-cash is also known as cryptocurrency. Bitcoin has no central bank or particular administrators who can send the message from user to user on peer-to-peer, which doesn’t require any intermediaries or agents between them. Bitcoin was invented by an unknown person and many are using the name Satoshi Nakamoto.

The transactions between are mostly through cryptography and are stored via Blockchain and were released as open-source software in 2009. It is usually used for an illegal purpose, by way of investments. During the Budget speech, 2018 the Government announced that it would take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system. The Finance Minister’s statement on cryptocurrencies not being legal tender in India, there has been considerable curiosity about the fate of Bitcoins. In cryptocurrencies, the technique of encryption is used. [1]

The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has been issuing guidance on Bitcoin since 2013. The Treasury has defined Bitcoin not as currency, but as a money services business (MSB). This places it under the Bank Secrecy Act which requires exchanges and payment processors to adhere to certain responsibilities like reporting, registration, and record keeping. In addition, Bitcoin is categorized as property for taxation purposes by the Internal Revenue Service (IRS).E dolomite is a website, that is still available on the online platform.[2]

 LAWS IN RELATION TO BITCOINS IN INDIA:

  • The Sale of Goods Act, 1930:

It is a possibility to say bitcoins as ‘Goods’ as per section 2 (7) of the sale of Goods Act, 1930. But under certain circumstances, it couldn’t be deemed as ‘goods’ because, as per Sec. 10 of the above said Act, the consideration must be in the form of price

  • Coinage Act, 2011:

Section 2(a): “coin” means any coin which is made of any metal or any other material stamped by the Government or any other authority empowered by the Government in this behalf and which is a legal tender including commemorative coin and the Government of India one rupee note.

From the above definition, it is clear that bitcoin being a virtual currency lacking the sanction of the appropriate authority in India does not fall under the ambit of coins under the Coinage Act.

  • Foreign Exchange Management Act, 1999:

Section 2 (m) which deals with foreign currency, section 2 (q), which deals with Indian currency and section 2 (h) which deals with currency. FEMA presently is not applicable when it comes to the regulation of Bitcoins in India.

  • Taxability with regard to Bitcoin in India:

Bitcoin may be treated as capital assets under section 2 (14) of the Income Tax Act, 1961, which talks about properties and securities held by an assessee. Further, any profit or gain arising from the transfer and sale of an asset.

Hence, there’s still viability, as of RBI’s Ban on the banks with undergoes cryptography exchanges – if the appropriate government is much concern with the money laundering risks.

References :-

[1] https://en.wikipedia.org/wiki/Open-source_software

[2] https://www.investopedia.com/terms/f/fincen.asp