CryptoCurrencies! The penultimate decentralised finance commodity that’s taking the world by storm, for close to a decade. If you have come across this Auto-Updated Guide by Cashify, that means you’re probably one of the 100 Million who own one of these digital assets! Or, perhaps you’re looking to become a Crypto investor/trader. Either way, with new announcements that leave us with more questions than answers, it’s hard to pin down the exact legality of Crypto in India.
That’s why we’ve published this guide that covers all you need to know about the legal status and classifications of Cryptocurrency in India!
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This article aims to answer your question: “Can Crypto Trading Get You Arrested In India?” in the simplest of words possible.
Let’s begin!
The Short Answer
No!
While there are no laws as of 28th November 2021 that explicitly talk about Cryptocurrencies or similar digital goods, that does not mean they are illegal!
Crypto today exists in a state that can be called “Outlaw”. That means you can’t get any institutional or state support in any matters related to Cryptocurrencies.
You’re on your own to safeguard your Crypto wallet, balance, and other related nuances. The lack of legislation also doesn’t mean tax evasion, as citizens must report Crypto Capital Gains as “Property” while filing income tax.
Related Reading: How To Report Crypto In Your Taxes In India: An Auto-Updating Guide.
The Long Answer
No, at least not yet!
Despite discussions back in 2019 that pushed for a ban on Crypto in India, public support and rapid adoption has deterred drastic or rash actions.
No one wants to disappoint investors or let their money drown, as that would hurt everyone. And So, the National machinery is currently scratching their heads (allegedly round the clock) to figure out just what to do with this new class of assets.
We see prevailing caution in the Government’s approach, due to concerns about the possible misuse of Crypto. These concerns primarily include:
- Terror Funding
- Drug Funding
- Money Laundering
Valid concerns, given the mostly untraceable nature of Crypto and Alt-Coins. However, in response to these challenges, there may be a more heavy-handed response than many may be comfortable with.
What’s Likely In The Future?
“Insider sources” allegedly said that the RBI intends to ban all “Private Cryptocurrencies”. And, introduce a new State-Operated Legal Crypto Tender. Alternatively, only a select few Cryptos may reach legal status.
Another “Senior Government Source” told news agencies that there could be up to a 40% Tax on cryptos, in an alternate scenario.
While the situation is more uncertain than any investor would generally be comfortable with, Crypto owners’ are holding on to their assets. Instead of Panic Selling, most of the 100 Million Indian crypto holders are choosing to keep their coins.
As of November end, 2021, it is unclear what will unfold as we go ahead. If it gets to the extent of banning all Private Cryptos, there will be a challenge lying in wait. Of dealing with the investment of over $10 Billion!
Related Reading: What Is Private Cryptocurrency? Is it Going To Be Banned In India?
What We Can Infer
These “suggestions” may or may not come to pass, depending on public support, awareness, or resistance. Similarly to how the idea of an outright ban was scrapped. Thus, we may see a more market-friendly approach once or if the Government figures out a safe and secure way to hold Crypto accountable.
If you get into a dispute related to your Crypto trade or investment, you’re on your own as there are no safeguards whatsoever.
Speculation tells us that a Cryptocurrency Bill may be introduced and discussed in the upcoming Winter Session of Parliament.
Related Reading: India Crypto Bill Explained: Pay Attention To These Bits.
That was all you must know about the latest guidelines on Crypto Trading! So far, you won’t receive a warrant or get a fine for trading Crypto in India, so long as you report capital gains in your taxes. Stay tuned to Cashify articles, as we’re closely following every development in this highly potent sector!
India Crypto Bill Update – December 10, 2021
As per the proposed legislation rolled out in order to regulate crypto transactions in India, there is going to be a hefty fine. We are not talking in thousands or lakhs. Yes, in crores it is and a staggering Rs. 20 crore at that. In addition, there is also going to be a significant amount of jail time involved. We are talking 1.5 years of jail time. From the looks of it, the penalties imposed for violation of the India Crypto Bill are really harsh indeed.
In addition, the new legislation has replaced the word “Cryptocurrency” with “Cryptoasset”. With the new terminology, we understand that the Indian Government is definitely planning on ensuring Crypto regulation on a broader spectrum. One thing is for sure that cryptocurrency will not be recognized as a legal tender in India.
Furthermore, the proposed legislation states that the government will impose a “general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing” in digital currencies as a “medium of exchange, store of value and a unit of account”. The India Crypto Bill is definitely taking Crypto trading regulation pretty seriously.
Going by what the new proposed legislation suggests, the new bill is to protect consumer and investor protection. This in turn, will prevent money laundering and tax evasion as well. Moreover, violation of these rules in any way will immediately make one liable to non-bailable arrest. Besides, we are talking about a non-bailable arrest without a warrant.
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Shantanu
An Entrepreneur and Freelancer, I am a Generalist who dabbles in everything. From green tech to education for underprivileged children, I pitch in my diverse skillset wherever it may send ripples, in the hope of making waves.