About

Cryptocurrency (or crypto, in short) is not owned or controlled by a country or a bank. They are not issued by the central bank of the country (in our case, the Reserve Bank of India) as legal tender.

• Neither are they recognised by the Government as legal tender nor are they regulated by the RBI. There are no laws that prohibit (or allow) trading in crypto. In that sense, cryptocurrency is like any other asset class such as gold, commodities or real estate.
• People trade in gold without the government creating a law for it. Same is the status of cryptocurrency at the moment.

Legal Status in India

• There is no explicit legalisation of cryptocurrencies in India but a verdict of the Supreme Court (in the Internet and Mobile Association of India V. Reserve Bank of India case) declared an outright ban on cryptocurrencies but raised the possibility of RBI’s jurisdiction for all forms of virtual currencies. The ban had come into force in 2018.
• The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, building on a previous version of the bill, initially aimed to ban private cryptocurrency operators, and simultaneously empower the RBI to issue what is known as central bank digital currencies (CBDC), which in India’s case is likely to be Digital Rupees.

Is cryptocurrency taxable currently?

• Yes. Cryptocurrency transactions are taxable in India in cases where the person earning such gains is an Indian tax resident or where the crypto is said to be domiciled in India.

Recent development

Ministry of Corporate Affairs (MCA) has made it mandatory for companies to disclose crypto trading/investments during the financial year.