how would FEMA apply?

[simple_love]

hi all.

i recently heard about bitcoin and have been curious since.

from my research, i have understood that bitcoin can be classified as currency or commodity.

if it is a commodity, it can be sent abroad without much hassle. but if it is a currency, it would come under FEMA.

what i don't understand is, if we today send bitcoins abroad and buy something for example (of amounts less than today's FEMA restrictions on fiat money), and tomorrow govt. declares that bitcoin is a currency, how would things work then? does it function retrospectively? if for example, they say a tax of 30% is to be levied on all bitcoin transfers made abroad, does that mean people who didn't know about this and made international transfers will be under trouble?

can someone help me understand the various possibilities of developments?

also, i am not clear about FEMA itself. what does it serve to protect?

while it is correct that all this depends on the government's response, there is no reason we shouldn't discuss the possibilities. that could foster some adoption and would stop people from doing stupid things that will harshly affect the bitcoin ecosystem in India.

[Benson Samuel]

hi all.

i recently heard about bitcoin and have been curious since.

from my research, i have understood that bitcoin can be classified as currency or commodity.

if it is a commodity, it can be sent abroad without much hassle. but if it is a currency, it would come under FEMA.

what i don't understand is, if we today send bitcoins abroad and buy something for example (of amounts less than today's FEMA restrictions on fiat money), and tomorrow govt. declares that bitcoin is a currency, how would things work then? does it function retrospectively? if for example, they say a tax of 30% is to be levied on all bitcoin transfers made abroad, does that mean people who didn't know about this and made international transfers will be under trouble?

can someone help me understand the various possibilities of developments?

also, i am not clear about FEMA itself. what does it serve to protect?

while it is correct that all this depends on the government's response, there is no reason we shouldn't discuss the possibilities. that could foster some adoption and would stop people from doing stupid things that will harshly affect the bitcoin ecosystem in India.

I had studied about FEMA informally in the past and documented it, but if you are looking for half serious answers under THIS current regulatory regime, you SHOULD talk to a lawyer.
Everything else is just a study!

[simple_love]

i understand.

because this is very useful for everyone in the community to know, and the answers will generally apply to everyone, can we as a community approach a lawyer and publicly document the findings? i think it is super useful to know all this.

i also think people considering their bitcoins with reverence to the law will help gain bitcoin some good light. the way the govt. reacts will be very reactive to how bitcoins *are* being used in contrast with how they *can* be used for good. people might looking at bitcoin at a completely "unregulated" system with full freedom which might hurt everyone in the future.

opinions?

[polynesia]

i understand.

because this is very useful for everyone in the community to know, and the answers will generally apply to everyone, can we as a community approach a lawyer and publicly document the findings? i think it is super useful to know all this.

i also think people considering their bitcoins with reverence to the law will help gain bitcoin some good light. the way the govt. reacts will be very reactive to how bitcoins *are* being used in contrast with how they *can* be used for good. people might looking at bitcoin at a completely "unregulated" system with full freedom which might hurt everyone in the future.

opinions?

This was indeed done sometime back.
You can have a look at this file.
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Bitcoins.pdf

[simple_love]

ok. the summary seems to be that using bitcoins for legal purposes is fine, but tax should be paid on the bitcoins possessed when acquired.
any sale of it would levy capital gains tax. so, even if we don't sell bitcoins, we should still declare and pay tax on it.

if after filing income tax,there is an audit and we are asked to prove our possession of the declared amount of bitcoins, how would we do that?
1. we would need to prove how the bitcoins were acquired (purchase invoice, service invoice, etc.)
2. we would need to prove ownership of said address ()

i'm sure the exchanges in India are going through this.  any opinions here?