All You Need To Know Before Investing In Cryptocurrencies in India
Cryptocurrency in India has been a topic of discussion for over a decade now. The popularity of Bitcoins and other cryptocurrencies sparked this discussion, but people still have doubts regarding the largest cryptocurrencies. The most common Google search is ‘cryptocurrency in India legal,’ but it often leads to more doubts. So, if you have been thinking of finding a lucrative investment and are attracted to cryptocurrencies, you will find all your answers here!
Cryptocurrency As A Currency
You must note that cryptocurrency is not considered a valid conventional currency by the Government of India. This means that you cannot use this currency to make payments or buy things in the market. The Reserve Bank of India is the only financial institution that can issue currencies in India. Since cryptocurrencies are issued by a powerful peer-to-peer network that is completely decentralized, the currency cannot be held valid to be circulated in the Indian economy. However, cryptocurrencies can be considered valid in the form of an asset, and you can trade with it in India. No Indian law prohibits the trading of cryptocurrencies.
Legal Status Of Cryptocurrencies In India
There is much ambiguity that surrounds the legal status of cryptocurrencies in India. To explain it in simple words, no Indian law prohibits the trading of cryptocurrencies. They are not owned or regulated by the Government of India. But at the same time, the Indian government does not impose any prohibition on the trading of these currencies. So, you can trade in cryptocurrencies but at your own risk.
The Reserve Bank of India, in 2018, prohibited all non-banking financial companies, banks, and the payments systems that were under the RBI from facilitating any financial transactions associated with cryptocurrencies. That said, the Supreme Court’s judgment in March 2020 revoked this rule, and now banks and other financial institutions can facilitate any transaction associated with cryptocurrencies. Hence, a positive response towards promoting trade in cryptocurrencies can be seen from the government.
Are Cryptocurrency Investments Safe?
Making investments in cryptocurrency is as risky as making any other investments such as shares, mutual funds, or bonds. So, you need to be careful and conduct proper research before making an investment. However, you must note that investing in mutual funds still has some regulation because they are controlled by the Securities and Exchange Boards of India (SEBI), but cryptocurrencies have no such control. Hence, the market of cryptocurrencies can be volatile.
Are Bitcoins Taxable In India?
The Indian Income Tax Act does not make any mention of cryptocurrencies. Moreover, there are no rules related to cryptocurrencies in the Indian taxation system. As mentioned above, the RBI has not granted a legal tender status to any cryptocurrency in India. Hence, there are no specific norms governing the way in which cryptocurrencies are taxed in the country. That said, you cannot get away with avoiding taxes on the profits you gain. For instance, any profit you get from selling bitcoins is taxed as business income if you trade frequently.
How Can You Buy Bitcoins In India?
It might seem like a complicated process to buy cryptocurrencies in India. However, you can get in touch with crypto exchanges to make this task easy for you. Furthermore, in order to open a trading account of cryptocurrencies, start by signing up on a platform of crypto exchange. After that, fill the form with your personal information and verify your email. Now, you can transfer money in Indian Rupees to your trading account to buy bitcoins.
Can You Get Cash For Bitcoins In India?
People mostly buy bitcoins because of their liquidity. They want to convert them to cash whenever they want out of their investments for any reason. So, you can get cash for bitcoins in India by selling them. Also, it can be done easily using a reliable cryptocurrency exchange. You will be required to have a KYC-verified account so that you can get cash for bitcoins. So, just follow all the requirements, and you will be sorted.
Which Bitcoin Wallet Should You Choose In India?
You can choose from a variety of bitcoin wallets that cater to a number of needs as well as differ in accessibility, security, and convenience. Exchange wallets, mobile wallets, paper wallets, hardware wallets, and desktop wallets are a few you could go for. The function of a bitcoin wallet is similar to that of an online bank account. It basically stores your bitcoins in one place. All cryptocurrencies can be safely stored and transacted using your wallet.
Investors in India are more and more interested in backing the cryptocurrency market since it has a lot of potential. The Indian market has more than 15 million Indians, meaning it is already bigger than the British crypto market with only 2.3 million investors. As is evident, the lack of clarity regarding the existing regulations has not thwarted Indians from running crypto exchanges. Although the future of bitcoins is still uncertain in India, it cannot be denied that cryptocurrencies are quickly finding a way into the mainstream finance of the country.