Thursday, March 10, 2016

CryptoCurrencies Scenario in INDIA

Since mostly used crypto is Bitcoin (BTC)..
So now on we will use bitcoin and crytocurrencies synonymously ...

Advantages:

1.Payment freedom: no limits
2.Low fees: no or extreme small fees
3.Secure: secure, irreversible and do not contain user information
4.Transparent: all information about Bitcoin money is available on block chain

Disadvantages:

1.Degree of acceptance: less awareness
3.Ongoing development: not mature yet


Legality issues

Many discussions are going on around the world, among financial regulators about how to integrate this currency with formal currency. Some countries have banned the Bitcoin transactions and some countries have welcomed it. The list of countries in this regard can be found here. However, many supporter of Bitcoin put the forth the view that, “it’s the money, and money has always been used for good purposed and bad purposes.”

Indian Scenario

Since Bitcoin is not a fiat currency with legal tender status under any jurisdiction, but the tax liability comes regardless of the medium used for transaction. In India, however, the press release by RBI, Bitcoin transactions are not authorized central bank or monetary authority. RBI, in the same press release has cautioned the traders and users about the security risks and issues that may arise. Technically speaking, Bitcoin is a computer program. The Indian CopyRight Act defines computer program as, ‘a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result.’ If we read point #3 Bitcoin working, it can be observed that it a computer program as per the definition. There is another support to Bitcoin; as per Forward Contracts (Regulation) Act, 1952, goods is ‘every kind of movable property other than actionable claims, money and securities.’ So Bitcoin may be defined as goods.

Following can be the concerns about Bitcoin in India.

1. Mining: Bitcoin mining seems like making our own computer program or writing a software code. Since, writing the software code is not a legal offence, hence, Bitcoin mining doesn’t look illegal.

2. Bitcoin transaction India: If Bitcoins transactions are done by the Indian, with the Indian in exchange of Indian Rupees then it would fall under Sale of Goods Act, according to Pranesh Prakash.

3. Transactions where Bitcoin recipient is in India but sender isn’t: Since, Bitcoin can be seen as computer program, this transaction may come under import of computer programs and will be liable to customs duty. However, if import of this ‘computer program’ is done via internet (like downloading the paid software), it doesn’t have to pay import duty since no physical shipment involved.

4. Transaction outside India, but in exchange of Indian Rupees:  Situation discusses above will also be applicable for person buying Bitcoins from online exchange based outside India. In Pranesh Prakash’s words, ‘ This situation would also be applicable to any person buying Bitcoins from an online exchange based outside India. The only documentation that would be required for buying Bitcoins from an online exchange abroad would be that which the bank may insist upon for exchanging Indian rupees into a foreign currency and then transferring it to an overseas account. This documentation would involve filing of Form A-1 if the total value of the money being exchanged is greater than USD 5,000.’

For more details please visit these sites,

link 1
link 2

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