A Concise Guide

Is Cryptocurrency Legal in India?

A Concise Guide

Understanding the Legal Status

The Reserve Bank of India (RBI) issued a circular in 2018 declaring that dealing in cryptocurrencies is not permitted in India. However, the Supreme Court of India overturned this circular in 2020, paving the way for the use of cryptocurrencies in the country.

As of now, there is no specific legislation governing cryptocurrencies in India. This means that the use, trading, and investment of cryptocurrencies are neither illegal nor fully regulated. However, the government and RBI have expressed concerns about the risks associated with cryptocurrencies and are exploring options for regulation.

Taxation of Cryptocurrencies

The Finance Act, 2022, introduced a new section (115BBH) in the Income Tax Act to tax income from cryptocurrencies. As per this provision, any income from the transfer of a virtual digital asset (VDA) will be taxed at a flat rate of 30%, without any deductions or exemptions.

Current Legal Scenario

The legal situation regarding cryptocurrencies in India is still evolving. The government is working on a comprehensive framework for regulating cryptocurrencies, while the RBI continues to issue warnings about the associated risks.

Conclusion

While the use of cryptocurrencies is currently not illegal in India, it is not yet fully regulated. The government and RBI are actively considering options for regulation, including taxation and licensing requirements. Individuals considering investing in cryptocurrencies should be aware of the risks involved and should stay updated on the evolving legal landscape.