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Bitcoin is definitely the most popular cryptocurrency in the world since its inception, and India stands to benefit considerably from this revolutionary technology. However, citizens are still confused about whether cryptocurrency is legal in India. We have traveled a long way since the banking ban on cryptos in 2018. While a cryptocurrency bill is still in the pipeline, the Government initiated a series of discussions with the stakeholders in the crypto industry in 2021. The Union budget speech could be called a landmark in the history of cryptocurrency in India as, for the first time, the Government proposed taxing cryptos, legitimizing them (if not legalizing them). However, we still need further clarity on the Government’s stance on cryptos.
However, to answer the pressing questions, including “Is Bitcoin Legal in India in 2023?” and to clear any confusion regarding the cryptocurrency’s taxation status in India, we have answered the nine most frequently asked questions surrounding Bitcoin’s legal status in India.
Q1- Is it legal to buy Bitcoin in India?
Yes, Bitcoin is 100% legal in India. No clear laws and regulations exist to monitor Bitcoin as of November 2023, but the Government has imposed a 30% flat rate of crypto tax on gains from the transfer of cryptocurrencies in India. Despite the tax implication, the legality aspect of Bitcoin and cryptos hasn’t yet been discussed. However, it doesn’t mean that you can’t trade in cryptocurrencies legally. Exchanges like WazirX operate on self-imposed regulations, where one is held to the same standards as a traditional exchange.
Q2- How do I ensure that my Bitcoin is stored safely?
To store your bitcoins, you have two options: cold wallets or hot wallets. Hot wallets are online wallets connected to the internet and are convenient for transactions but are a little less secure when compared to cold wallets. Hot wallets are usually not recommended for storing large amounts of bitcoins.
Alternatively, cold wallets are a safer option for safely storing your bitcoins, as they are offline wallets or hardware wallets. You can read more about these wallets to secure your Bitcoin storage and prevent it from scams.
Q3- What are the legal procedures for buying Bitcoin in India?
If you are wondering, is it legal to buy Bitcoin in India? Here are the legal procedures to buy bitcoin in India are as follows:
- The first step is to register yourself on a trusted crypto exchange platform. It is the most crucial step as you have to choose the most reliable and trustworthy crypto exchange platform for safe and secure trading. One such reliable and most trusted crypto exchange is WazirX.
- After registering, you have to verify your KYC by providing legal documents such as a pan card, an Aadhaar card, etc. Again, it is recommended that you choose an exchange with proper KYC and AML procedures to ensure 100% legal compliance.
- Add your bank details and UPI details to the crypto exchange and wait once all the verification completes.
- Lastly, you can add money to your trading account via your bank and then use it to buy bitcoin on the crypto exchange.
Q4- What are the Government’s views on buying or selling Bitcoin?
The Government has concerns over using Bitcoin for making payments for illicit activities such as money laundering, tax evasion, terrorism financing, etc. The Government intends to prevent the illegal usage of cryptocurrencies. However, as we’ve discussed in a recent post, blockchains can be excellent forensic tools to catch malicious actors.
RBI is planning to issue a digital rupee in the FY 2022-2023. Besides this, the Government has proposed some tax provisions regarding the sale/purchase/transfer of cryptocurrencies in the Union Budget of 2022.
New tax rates have been imposed on the transfer of digital assets, which includes Bitcoin and other cryptocurrencies. The budget also explains what constitutes digital assets. A digital asset will include ‘any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means.’ The digital asset may be exchanged with or without consideration.
Q5- What are the taxation policies for Bitcoin in India?
Cryptocurrency taxation in India was one of the most confusing aspects when buying bitcoins. Earlier, neither the Income Tax Act nor the GST act defined cryptocurrencies. However, in the 2022 Union Budget, FM Nirmala Sitharaman proposed a tax regime for digital assets, including cryptocurrencies.
- Anyone holding Bitcoin or cryptocurrencies in India would be required to report their gains or losses from the digital assets as a part of their income.
- A flat 30% tax will be charged on the income from the transfer of digital assets.
- 1% TDS will be deducted on the payment by the buyer if the amount crosses the threshold limit.
- Cryptocurrency is subject to be taxed at the recipient’s end if received as a gift or transferred.
- The loss from virtual asset investment cannot be offset against any other income.
The provisions are applicable from April 1, 2022. However, more clarity is expected soon.
Q6- What is the minimum amount needed to buy Bitcoins in India?
It depends on the cryptocurrency exchange. While the price of a Bitcoin may be in tens of lakhs, you have the option to buy a fraction of Bitcoin for as low as INR 100. For example, WazirX allows you to buy Bitcoin for as low as INR 100.
Q7- Is Bitcoin mining legal in India?
The legal status of Bitcoin mining is not clear in India, and still faces uncertainty. Mining Bitcoin requires a lot of energy, and it consumes about 60 terawatt-hours annually. However, the government practically banned the import of ASIC machines in India in 2017.
A ban on ASIC machines leaves the miners with GPU mining, which is an energy-intensive process and is not a desirable option considering the high electricity costs and low efficiency. In fact, Bitcoin miners have abandoned GPU mining altogether, as it is deemed to be unprofitable.
Q8- What legal steps should be taken to safeguard against Bitcoin fraud and scams?
Here are a few steps to consider before deciding to invest in Bitcoin.
- There are various fake crypto exchange platforms out there, and there is a need to do market research before buying bitcoins from an exchange platform. Stick to reliable and trusted crypto exchange platforms such as WazirX.
- Make sure to safely store your Bitcoin in an offline wallet for better security.
- Make sure you set up two-factor authentication for your online crypto-wallets.
- Never share your private key or login credentials with anyone.
Q9-Will Bitcoin be accepted as a legal mode of payment?
Globally, many use crypto assets as a mode of payment due to easy global transfer and lower transaction costs than bank transfers. However, the Government of India does not grant cryptocurrencies or Bitcoin the status of a legal tender. And we might not see the Government doing it anytime soon. In 2022, the Government has taken the initial steps of regulating cryptocurrencies via the proposed tax regime. Despite the positive steps by the Government, L Badri Narayanan, a legal expert, states that ‘the recognition of digital assets under income tax is not akin to granting legal status.’ Notwithstanding the above fact, thousands of global e-commerce merchants accept Bitcoin and cryptocurrencies as payment.
Conclusion
We hope this guide answered a few of your questions regarding the legal status of cryptocurrency and whether it is legal to buy Bitcoin in India in 2022 or not. Also, if you’re looking for more information regarding the wide world of crypto, head over to our blog page – where we publish informative articles regularly for your benefit.
Further Reading:
What is the difference between a token and a Bitcoin?
Are Tether and Bitcoin related? How Tether affects Bitcoin?
6 Things to Consider Before Investing in Bitcoin
What are the Differences Between Bitcoin and Ripple?
6 Bitcoin Myths That You Should Stop Believing
Bitcoin Wallets: The Definitive Guide
What is Litecoin (LTC)? Hows is it Different from Bitcoin?
What are the Differences Between Peer-to-Peer and Regular Bitcoin Exchanges?
Why are Bitcoins More Popular?
6 Tips to Keep Your Bitcoin Wallet Safe
5 Ways to Keep Bitcoin Transactions Private
What Will Happen when all Bitcoins are Mined?
Bitcoins in India: Challenges and Opportunities Ahead
Does Bitcoin have a volatile nature? Why?
Can Bitcoin Replace Credit Cards?
Why Start-ups Should Consider Using Bitcoins?
What is Bitcoin halving? Why is it important for cryptocurrency investors?
Can you buy shares in Bitcoin?
What is the difference between a token and a Bitcoin?
Are Tether and Bitcoin related? How Tether affects Bitcoin?
Opportunities And Challenges In Indian Crypto Market
Frequently Asked Questions
How Bitcoin Works?
Bitcoin is based on the blockchain, a distributed digital ledger. As the name implies, blockchain is a connected database made up of blocks that hold information about each transaction, such as the date and time, total value, buyer and seller, and a unique identifier for each exchange. Entries are linked in chronological sequence, forming a digital chain of blocks. Blockchain is decentralized, meaning a centralized institution does not own it
What Type Of Currency Is Bitcoin?
Bitcoin is a type of digital currency or cryptocurrency. In January 2009, Bitcoin was established. It's based on Satoshi Nakamoto's ideas, which he laid out in a whitepaper. The name of the individual or people who invented the technology remains unknown.
Is Bitcoin And Cryptocurrency The Same Thing?
Bitcoin is a cryptocurrency that was designed to facilitate cross-border transactions, eliminate government control over transactions, and streamline the entire process without third-party intermediaries. The absence of intermediaries has resulted in a significant reduction in transaction costs. Satoshi Nakamoto, the creator of Bitcoin, created the first cryptocurrency in 2008. It began as open-source software for money transfers. Since then, plenty of cryptocurrencies have emerged, with some focusing on specific fields.
What Is Bitcoin Used For?
Bitcoin was created as a means of sending money over the internet. The digital currency was designed to be a non-centralized alternative payment system that could be used in the same way as traditional currencies. Bitcoin is being used by an increasing number of businesses and individuals. This includes establishments such as restaurants, apartments, and law firms.
How To Invest In Bitcoin?
Bitcoin may be invested in two ways: through mining or exchanges. Bitcoin mining is carried out by high-powered computers that solve challenging computational arithmetic problems that are too difficult to complete by hand and complex enough to tax even the most powerful computers. WazirX, a Bitcoin exchange, is another alternative.
Is Bitcoin Safe And Legal In India?
In 2020, the Supreme Court of India lifted the RBI’s restrictions on cryptocurrencies. According to the Supreme Court, the existence of Bitcoin or another cryptocurrency is unregulated but not unlawful. The verdict has greatly aided the world of digital money in the country. To put it another way, investing in Bitcoin is perfectly legal, and you may do so through various apps and traders.
Is Bitcoin Mining Free?
Bitcoin mining isn't free, but it can be tried on a budget. Bitcoin mining is an essential part of the blockchain ledger's upkeep and development and the act of issuing new Bitcoins. It is accomplished by the use of cutting-edge computers that tackle complicated computational arithmetic problems. The effort of auditor miners is rewarded. They're in charge of ensuring that Bitcoin transactions go off without a fuss and that they're legal.
How Much Is 1 Bitcoin Worth Today?
Check out the current price of Bitcoin on the WazirX exchange. Bitcoin's value is primarily determined by its supply and demand in the market. Other elements have an impact on its worth. Its intrinsic value can also be calculated by calculating the average marginal cost of producing a Bitcoin at any given time, based on the block reward, electricity price, mining hardware energy efficiency, and mining difficulty.
How Many Bitcoins Are There?
There are 18,730,931.25 Bitcoins in circulation as of June 2021. The total number of Bitcoins that would ever be there is just 21 million. On average, 144 blocks are mined every day, with 6.25 Bitcoins per block. The average number of new Bitcoins mined every day is 900, calculated by multiplying 144 by 6.25.
How To Create Bitcoin Account?
Firstly, Go to the WazirX website and sign up. Then, a verification mail will be sent to you. The link sent via verification mail would be available only for a few seconds so make sure you click on the link sent to you as soon as possible, and it will verify your email address successfully. The next step is to set up security, so select the most suitable option for you. After you have set up the security, you will get a choice to either proceed further with or without completing the KYC procedure. After that, you will be directed to the Funds and Transfer page, where you could start depositing Bitcoins to your wallet. You can also deposit INR and then use it to buy Bitcoin for your WazirX Bitcoin wallet.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
