Bitcoin Forum

hi, i would like to know is it leagal to accept bitcoins as a mode of payment in india? if so are there any legal statement or document supporting it?

Accepting btc payments have no legal guidelines. There is only need to look at regulations when buying or selling.

hi benson
           i am planning to integrate bitcoins as a mode of payment on my website via bitpay.i would like to know what are the regulations which i have to follow ?

You can  accept bitcoin in your website, the press relese was a general public warning on dangers to bitcoin. now a ruling on the legality of bitcoin.

Short answer yes it is legal to accept bitcoin. There are no  regulation regarding bitcoin. however the regulation does apply once you convert your bitcoin into INR

so its safe to keep it as btc rather than converting to inr right?

It is safe as per our interpretation. If you are not converting it to INR it should not be an issue.


Regards

The regulation in conversion i am talking about is the normal tax that you pay when you get money from any place.
For bitcoin it is usually short term Capital gain Tax. Which i expect every Indian Bitcoiner to pay. (Follow the laws of the land)
But for businesses i would  say it may come under some other classification, a chat with your CA it  advisable here.  

Convert what you need for taxes and keep the rest.

Accepting Bitcoin and Trading bitcoin is never Stopable by any one or any government, Warnings are just to inform people about its volatility and risk of loosing but it doesnt mean that Bitcoin is Illigal,

thanks for clarifying my doubts. this was the answer which i was looking for. 

You can only pay taxes for services that you are rendering or physical goods that you are selling AND making a profit off such transactions in a 'recognized' currency.

Bitcoins are not considered as a currency in India, not yet at least, and there also no limitations imposed by the government, so accepting a payment for a 'virtual service' with a payment system that isnt 'recognized' shouldnt be taxed (in my opinion).

However like everyone else if I am selling ANYTHING online and making a profit out of selling it I m making sure that I pay my tax, and that is advisable.

However it is wise not to mess with the IT guys if you dont have a fleet of lawyers guarding you.

In India what comes under scope of law depends on interpretation of laws. You've my word!
Whosoever are commenting are just speculating like Bitcoin. Only time will tell whether it is legal to accept VC's.

Best wishes!

In the words of the great Benu Da, this is a "Future's Market" if you dont have balls of steel and nerves of platinum you dont belong here.

I've balls of tissue stimulated by testosterone not greed. Look around us to get an idea of what our greed has done to society. I don't want to be proponent of "Future Market" without peeling Bitcoin unto core. I'd like to repeat clique again- I do appreciate crypto-currencies. Not Bitcoin. (In India)

Bitcoin is a future currency, India also must understand that, If indian Government want to Support bitcoin and want to Earn something from Bitcoin market then obbiously they will think something and bring some tax rules like in almost countries where they warn against bitcoin but still Bitcoin is legal in self risk and they are geting tax from Bitcoin transaction if not bitcoin will not stop its business I hope Indian Bitcoiners will also think about options like Chinese had done.
Chinese bitcoiners are investing there money from Hongkong and Singapore who got the loss? of course china same thing could happen in India if Indian Government dont want to understand, in this few days of warning Indians are transaction from Nepal so nepal's transaction Rank came from 112 to 56 in 1 week, and good supports indirectly from Nepal Rastra Bank that they are accepting 500 and 1000 Indian Currency which were band in Nepal since 13 years. So now Indian Government must think they want there money pays tax in Nepal,m Bangladesh, Bhutan and in Pakistan or they want to collect tax in India?

Nepali Newspaper Translated by google: Kathmandu - thirteen years, Nepal has banned five hundred and one thousand Indian Rupee rate notes has now mobile. Sunday held Nepal - India Business Intergovernmental Committee appointee (aijisi) agreed at the meeting. - See more at: http://www.nagariknews.com/economy/corporate-banking/story/11169 # sthash.AQK07L8P.dpuf

Good Luck.

I've balls of tissue stimulated by testosterone not greed. Look around us to get an idea of what our greed has done to society. I don't want to be proponent of "Future Market" without peeling Bitcoin unto core. I'd like to repeat clique again- I do appreciate crypto-currencies. Not Bitcoin. (In India)
[/quote]


You know I dont understand your point sometimes, in the beginning you had crappy english then all of a sudden you have an excellent control over grammar. You are both sympathetic and apathetic towards Bitcoin (in India).

I like people like you. Your level of appreciation is either too high hence its considered sarcastic OR your sarcasm is of such a level that after reading your comments people (I) dont know whether to laugh cry or whatever.

http://articles.timesofindia.indiatimes.com/2013-12-15/internet/45215410_1_mtgox-bitcoin-transactions-currency

though capital gains tax can be imposed for the sale of BTC in India, i don't think it covers for the sale abroad or at exchanges in other countries.

For example if u sell your BTC in MTGox and transfer those funds into your Indian bank account it can either be considered as
1) income from a forex trade(if the Indian Govt consider it as a currency or commodity) or just a simple trade done on a overseas market
OR
2) income from a software export, because BTC has not been recognized as a legit currency by any Govt

In both the cases the Indian Income Tax Department does have provided Tax Benefits. But the forex conversion charges would be imposed for these by the banks.

So I think the govt should come up with regulations specifically for BTC and other crypto currencies(each coins should be named, with new ones to be added with periodical updates)
or
just enjoy the foreign funds coming in and make use of it for large current account defecit we have... lols  ;D

Indian Government must come with some Tax rules with bitcoin if not they are going to loose taxes, Bitcoin is not a single country currency so if Indian Government will not accept bitcoin legit then of course Indian Bitcoiners will trade there bitcoin in US so US gov is going to get taxes of Indian Bitcoiners.
Bitcoin exchanges must try to legalize trading business and the transaction must seen to Indian government so Government will be sure of AML and i hope they will issuee some rules and regulations. If indian government will tigtned there hand then ofcourse it will create Money laundring in huge coz they dont have any monitoring system untill they will bring bitcoin to some legal part.

Just to clarify, this situation,
NO Bitcoins acceptance is not Criminal (yet)

But hey, in our country being gay is also considered a crime :P Atleast the Aussies like Bitcoins.

Here is the Answer for your question: http://cis-india.org/internet-governance/bitcoin-legal-regulation-india

Well i accept bitcoins for many freelancing jobs. Why would it be illegal?

Accepting bitcoins for freelancer job is not illegal, but the question how you are treating them in your tax return and want kind of documentation trail you are keeping in order to support with department queries is what matters.

Buying and selling of bitcoin is not illegal but only if buying/selling is done through reported money. One might get in problem trading in bitcoin through cash, if one day the department think of initiating action against bitcoin people. Certain aspects are to be taken into consideration.

Not to scare anyone but as a member I wanna caution people dealing in cash for buying/selling of bitcoins. Also, the one who are providing services or selling goods needs to consider certain parameters which falls upon the legal line of law.

Regards
--
Kanishk Agarwal
Advocate
CriTaxCorp
Criminal-Taxation-Corporate
www.critaxcorp.com
+919971666252

Here are some of my thoughts on this topic. I am not an expert by any stretch of imagination :P

http://ramblingsmemind.blogspot.in/2014/09/bitcoin-currency-or-commodity-and-how.html

One benchmark you could always use for tax aspects is - how would it work if I replace bitcoin with gold in the question.
Is it legal to buy gold with cash? - The answer is yes,

On a separate note, have you considered using the signature feature of this forum, Kanishk?
It could be useful to you. In case you change your phone number or product expertise, your old posts would still direct clients to the correct number, if you just update your signature.

I am not sure if many people actually go about filing those incomes in their tax returns.
As its hard to know which bitcoin address is whose, it would also be hard for the government to find out unless you trade them for Fiat.

Hypothetical case - Bitcoin goes to the moon and you trade some of them for fiat. You may want documentary proof to minimize your income tax payout.

how much tax need to pay ?

Sure, you can use bitcoin freely :)

Correct. It is more of a moral issue right now. If you want to report all your BTC income as regular income, you might want to pay tax on it.

But since RBI has no such guideline (how to calculate tax on Bitcoin income), you might just want to report only the amount you convert to fiat.

Having that said, it would be nice to have some guidelines from RBI or income tax department on how taxable BTC is and how much tax to pay.

I guess if you want to be totally accurate/honest, you have to calculate your BTC income based on the exchange rate on the day you receive BTCs.
You would then have capital gains/losses when you actually convert to fiat.

Since we are supposed to pay tax when price rises and we make a profit, wonder if I can write to the IT department asking for a donation since I lost due to the price crash ???

If you have a cash loss, you can claim a capital loss and offset it against capital gains.

How do I account for mining, faucets & tips from others? Also if i make any gains on altcoins how to represent that?

Is there any limit on capital gains tax? like you dont owe income tax for income upto INR 2lakh.

Technically, they would be income from other sources.


By gains, do you mean profit on conversion to ruppees? If yes, capital gains tax would be applicable.

There is no limit on capital gains. Of course, you can still set off against capital losses.

as far as I know it is legal but can be taxed if u are earning income via bitcoin.  the govnt so far hasnt made a firm stand on bitcoin , >.<

How can I pay my taxes in Bitcoin?
Am sure that the Indian Govt has not yet asked or mentioned anything about this as yet.
In fact, if they do, it would legitimize Bitcoin is a big way in India!

I doubt if this would ever happen.
Even though the government recognizes the USDs and EURs of the world, taxes still have to be paid in INR.
So even if BTC gains legitimacy and is recognized, the government would still want taxes to be paid in INR.

I think the ambiguity here is more for people who do not convert their BTC. What needs to be paid in that event?

If you have got your BTC by providing some service, convert it to INR at the prevailing exchange rate and report it under Income from Other sources. Let us say you earn 1 BTC, you would report income of INR 20,000.
If you decide to convert this BTC into INR at a later point of time, when the exchange rate is INR 18,000, you would be able to claim a capital loss of INR 2,000.


When in doubt while dealing with BTC, think of it as a 2 step process.
When you get BTC - Step 1) You receive INR. Step 2) You convert INR into BTC at the prevailing exchange rate.
 

Thanks for short and accurate answers :)

So, mining & tips etc will be taxed under income tax.

By gains on altcoins i mean if i increase my BTC by trading alts.
By your answer i understand that no one is yet sure what taxes are to be paid if we dont convert to INR, so i don't pay anything if i keep my BTC. Right?

BTW how do you calculate taxes if u buy other commodities/stocks but don't sell them for INR?

Also if i buy miners or risers using BTC what happens then?

Its all so unclear. I think RBI needs to say more than "We will integrate digital currencies in future."  >:(

It can be taxed tho only if u file ur papers and submit them for taxation,

If u dont show any proof of dealing with btc no 1 will care, but for people

Who are wanting to make mining or btc a steady income it will proly be important to reveal abit for tax purposes

If you make BTC gains (which translate into INR gains) by trading alts, technically you still have to pay taxes.
Taxes are applicable on barter transactions, which is what these trades would fall under.

For illustration purpose - You buy an altcoin for 1 BTC (Value on that day INR 18k) and sell it for 1.1 BTC (Value on that day INR 22K), you have made a gain of INR 4K, on which you will have to pay taxes. If you sell those 1.1 bitcoins for INR 22K at a later point in time, no taxes would be applicable.


Same logic - when you sell them (for BTC or other commodities), taxes are applicable.


It is consider liquidation of your BTC. If you had obtained BTC at a lower price, then capital gains tax would be applicable.

Disclaimer - Please consult your tax advisor before taking any decisions.

What happens with services?
Lets say I get 10 BTC today for some work worth approx 150K INR.
What happens if I do not wish to convert it at all?
Where are the taxes sorted, if all my vendors all accept BTC itself? If I get salt to steel with it, where does conversion come in?
However, If I were to pay taxes, they would have to be in Bitcoin correct? This would not be a viable option at the moment as there needs to be more time before Bitcoin can even be defined on a broad, iron clad manner.

What happens if the value of BTC that is being held after taxes rises?
So, if my 150K INR - 45k INR tax becomes 1050K INR, what happens there?

I think, the closest option is to declare the income on the minute of receipt and convert what needs to be paid into taxes only. Or pay taxes each time we convert or purchase something.
Its a very tough problem for any tax authorities to solve.

I am not an expert on tax matter. So can we accept 10s of bitcoins in services and then pay taxes on them in the form of INR?
Will the government punish us for using bitcoin?

And that's why there are still no regulations or tax filing guidelines from government!

If the government wants everyone to file taxes on their Bitcoin transactions, all such minor details need to be accounted for and addressed, so it will take considerable amount of time for authorities to come up with a system that works. Until then, we're the masters of our own and can choose to do what we please.

My best suggestion would be to keep a proper detailed record of all your crypto transactions. In future if the authorities come to ask any questions, you should have everything to answer. Then let them decide what you should pay and what you shouldn't. You can clearly say that you didn't report it earlier because there were no certain guidelines.

You still have to pay tax on the income of 150K INR. Taxes will have to be paid in INR.



These are barter transactions and gains (ie market value of BTC on the day you purchase salt, less the market value of BTC on the day you purchased them - either by paying fiat or providing services) would be taxed as capital gains.



Taxes will have to be paid in INR, whether you receive payment in the form of bitcoins, gold coins, sodexho coupons or thirupathi laddoos. :)



If the value of BTC rises and you hold it, there are no tax implications. When you sell it or purchase goods with it, you will have to pay capital gains tax.


Here is an interesting article on bitcoin taxation.
http://www.livemint.com/Money/3qcKrBcAMIisahVOyOygYK/Are-bitcoins-currency-or-asset.html

The article talks about indirect taxes as well, making my head spin.  ;D

i don't think india has any law related to bitcoin or cryptocurrencies
so officially they are neither allow nor banned

@polynesia

Thanks for your answers. :)

I think all the problems will be solved if they just declare BTC legal tender as INR is. Don't fight it, just accept it. :P

But the problem is, that it isnt a tender, its a currency, if it ever got accepted as a tender it would be very difficult for people to get used the idea of using it as a currency.