Cryptocurrency is the decentralized form of digital asset that is based on blockchain technology. In the most recent years, cryptocurrency has gained the interest of a lot of investors. Social media has also played a significant role in creating hype around blockchain technologies and cryptocurrencies. It continues to gain popularity among the common people also due to its multiple applications and benefits. It provides passive income and a completely decentralized form of transaction without the involvement of any trusted third party. India is no stranger to cryptocurrencies. It is estimated that around one crore Indians have invested in cryptocurrency.
Investing in cryptocurrency can be risky, but it is potentially very profitable. According to cryptocurrency expert, investment in cryptocurrency can be highly risky, but it can generate a passive income and help investors build wealth.
As we all know, trading in cryptocurrencies is subject to market risks. To be on the safe side, you should invest only as much as you can afford to lose.
Cryptocurrency in India
In India, cryptocurrency exchanges urge the government to define cryptocurrencies as digital assets and not as currency. Cryptocurrency trading has been increasing rapidly in India. This digital currency has fascinated many investors. One of the primary reasons for its growing popularity in India is its decentralized and transparent transactions. According to recent surveys, it is estimated that around 10 million new crypto investors have been added from India in 2021.
In India, growth-wise, the crypto industry has grown from four-five million people in 2018 to 15-20 million investors now with more than $1.5 billion invested. This has been driven by the superlative returns given by cryptocurrencies. Such as bitcoin, ether, and dogecoin over the past three years. Billion dollars of trading is taking place every day through various crypto exchanges that serve the Indian market. Going by the number of crypto owners in terms of population, India ranks fifth.
The Legality of Cryptocurrency in India
Cryptocurrency, as a medium of payment, has neither been authorized nor been regulated by any central authority in India. Further, no set of rules, regulations, or guidelines has laid down for resolving disputes that could arise while dealing with cryptocurrencies. Hence, crypto transactions come with their own set of risks.
At the moment, there is no legislature that covers cryptocurrencies in India. But this doesn’t mean that owning cryptocurrency and cryptocurrency trading is illegal in India. This simply implies that the legal legislative framework is missing regarding cryptocurrency trading.
A Bill on cryptocurrency has already submitted before the Union Cabinet, but a decision will be taken in this regard. The government is yet to bring in guidelines to regulate the industry.
The rapid rise of cryptocurrency in India has opened up several business and income opportunities for several people. However, there is still some confusion about how the government may tax these incomes or how an individual or institution should declare them.
The government has already made it mandatory for companies dealing with virtual currencies to disclose their profit or loss incurred on these transactions. It has also asked them to disclose the amount of cryptocurrency they hold in their balance sheets. But there are no taxability laws to govern all these transactions.
Taxation on the Cryptocurrency Earnings in India
The Reserve Bank of India (RBI) has not yet granted Bitcoin or any other crypto the status of legal tender in India. Hence, there are no clear rules or guidelines defining taxability for cryptocurrencies. Which calls for specific clarification from the Income Tax (IT) department.
Currently, India does not have a rule about how crypto earnings taxation. Tax authorities have been continuously working to carve out the rules of taxation for cryptocurrencies.
Firstly, you must ensure that you are maintaining proper records of all your transactions. Secondly, always keep in mind that these assets are unregulated in India, and therefore there is a high potential risk in owning or trading in them. However, you must pay taxes if you have earned an income. Seek the help of an expert who can guide you through.
However, cryptocurrency experts believe that the government may recognize cryptocurrency as an asset, like real estate, stocks, or gold. This means that the government may levy capital gains tax on profits made after selling cryptocurrencies. Just as one does after selling real estate or stocks.
Cryptocurrency trading is likely to see a formal taxation structure as the Ministry of Finance has reportedly made a committee to find out if the income made through crypto trading and investment needs to be taxed.
The regulation of transactions involving cryptocurrencies by the government and the legitimacy provided to digital tokens could give investors more confidence in the sector. Many cryptocurrency experts believe that regulating cryptocurrency will generate tax revenues for the Indian government as well.
If you are also planning to invest in the crypto space, you must attend cryptocurrency training to gain deep and detailed knowledge about the crypto market and its trading procedures. For this, you should apply for the different online training programs available. These programs also provide cryptocurrency certifications after the completion of the training or course.
Observing the popularity of cryptocurrencies. There’s no doubt that these digital assets might establish themselves as a convenient digital mode of payment in the coming future. Given that they offer scope for several promising innovations. So, if you are looking forward to investing in the crypto market, there’s a need to opt for cryptocurrency training.