Here I have mentioned domestic transaction.
what difference it make, if it domestic or not, how can you prove with bitcoins that it was in fact domestic transaction. If Indian government still ignoring this biz, just because it has no any significant volume. if volume increase they will act 100%.
If bitcoin was mined in India and it can be proved, it means its domestic.
Even if govt. wants to act tough, after significant increase in volume,how will govt. dismantle sites and exchanges on tor and i2p like atlantis and silk road ?
Ok let me clear this thing up. for a Tax is to be levied on any item, it need to be represented in the national currency of the country levying tax. On products, tax is levied when import or export of products are done through countries or states. VAT , Sales tax, excise duty. etc.
A tax cannot be levied on a currency of a different country, for example if you bring in USD into the country it is not taxed but the minute the USD hits the RBI system as a conversion to INR the tax on it is levied. or the RBI converts it into INR for TAX purpose.
So tax is levied on the conversion of the currency. where currency is involved. if bitcoins are treated as currency then on the conversion of bitcoins to INR the tax will be levied.
But if bitcoin is treated as a commodity the tax can be levied without the conversion of bitcoins and the tax is placed on the total value of bitcoins.
so as there is a grey line over the definition by the government on bitcoins as to treat it as a commodity or a currency.
