As of November 2024, Bitcoin and other cryptocurrencies are legal but remain largely unregulated in India. Here’s an overview of the current legal status and regulations:
- Legality:
- Cryptocurrencies, including Bitcoin, are not banned in India. The Supreme Court lifted the Reserve Bank of India’s (RBI) 2018 ban on banking services for cryptocurrency-related businesses in 2020, revitalizing the market【7】【8】.
- Taxation:
- Profits from cryptocurrency transactions are subject to a flat 30% tax without differentiation between short-term or long-term gains. Additionally, a 1% Tax Deducted at Source (TDS) applies to transactions exceeding ₹50,000 annually. A 4% cess is also levied【7】【8】【9】.
- Compliance and Monitoring:
- Cryptocurrencies are classified as Virtual Digital Assets (VDAs) under the Income Tax Act. Transactions involving these assets must adhere to anti-money laundering (AML) and Know Your Customer (KYC) norms under the Prevention of Money Laundering Act (PMLA)【7】【9】.
- Regulatory Framework:
- India is yet to adopt a comprehensive regulatory framework for cryptocurrencies. The government is working toward balancing innovation with security and financial stability. There is also a focus on creating an official digital currency by the RBI, which could coexist with private cryptocurrencies【8】【9】.
- Mining and Trading:
- Cryptocurrency mining and trading are legal in India. Several platforms facilitate trading, allowing users to convert cryptocurrency to Indian Rupees (INR)【8】.
India’s approach reflects cautious optimism, aiming to harness the benefits of blockchain while addressing associated risks. However, regulatory uncertainties persist, with the government signaling further developments in the near future【7】【8】【9】.
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