Here’s How You Can Invest in Bitcoins in India

The price of Bitcoin is currently on a stellar run. It has seen steep appreciation ever since the start of 2021 on the back of positive developments. Yet, it is still not considered legal tender in many countries, including India. However, investors are seeking to invest in Bitcoin as an investment avenue. We have covered the following in this article:

Latest updates – Clarification on proposed Section 115BBH in Budget 2022

1. Losses incurred from one virtual digital currency cannot be set-off against income from another digital currency.
2. Infrastructure cost incurred on mining crypto assets will not be treated as cost of acquisition.

Union Budget 2022 Outcome:

1. Income from transfer of virtual digital assets such as crypto, NFTs will be taxed at 30%.
2. No deduction, except the cost of acquisition, will be allowed while reporting income from transfer of digital assets.
3. Loss from digital assets cannot be set-off against any other income.
4. Gifting of digital assets will attract tax in the hands of receiver.Losses incurred from one virtual digital currency cannot be set-off against income from another digital currency.

The price of Bitcoin is currently on a stellar run. It has seen steep appreciation ever since the start of 2021 on the back of positive developments. Yet, it is still not considered legal tender in many countries, including India. However, investors are seeking to invest in Bitcoin as an investment avenue. We have covered the following in this article:

What Exactly are Bitcoins?

Bitcoins are the most popular crypto or virtual currency. Bitcoins are a currency similar to any other currency but just that they don’t have any physical form. They are in use since the year 2009. Bitcoins are the pioneer of the decentralised digital currency in the world. No government or regulatory body oversees the circulation of the currency. 

How to Invest in Bitcoins in India?

You can purchase Bitcoins in India through various online Bitcoin exchanges. You may also see some platforms that allow peer to peer Bitcoin transfer. However, it is advisable to purchase Bitcoins only through Bitcoin exchanges in order to avoid the chances of losing your money.

Before you could invest in Bitcoins, you are required to under KYC (know your customer) verification. You have to provide your PAN card, valid address proof and photographs in the prescribed format to complete the process. You may undergo your KYC verification before or after opening a trading account with a Bitcoin exchange. 

Legal Status of Bitcoins in India

There are several questions over the legal status of Bitcoins and other cryptocurrencies in India. In 2018, the Reserve Bank of India (RBI) restricted commercial banks from facilitating Bitcoin transactions in the country. This was a major jolt to the industry.

However, this order of RBI was rebuked by the apex court in 2020. This gave the crypto exchanges much-needed relief as they could restart their business. One thing to note here is that it was never illegal to hold or transact in Bitcoins in India. 

How Much Can You Invest in Bitcoin?

As of the 19th of March 2021, the price of one Bitcoin stands at a massive $58,497.30. However, you are allowed to buy partial Bitcoins. Therefore, you need not arrange for a sum touching nearly $60,000 to get started with investing in Bitcoins. You can invest even a sum as low as Rs 100. 

Conclusion

Despite the fact that investing or trading Bitcoins in India is not illegal, there are not many takers. Investors are still sceptical about the associated risks, and the warning issued by RBI and the government have only added to the woes of Bitcoin exchanges in India.