What is cryptocurrency?
->>> It is an electronic currency(Digital or Virtual money) which do not belong to any country like Dollar, Euro, Yen, INR. It cannot be seen and touched.
How they are generated?
->>> This is being created out of solving mathematical currencies. It is being generated by computer and also traded (called Mining). There are many companies who started bitcoin wallets, where you can transfer from one wallet to another wallet easily. This is the most costly currency as on date.
What is the main objective of bringing cryptocurrency?
->>> The main objective is to transfer the amount without any intermediaries. If you would like to transfer any sum of money from one person to another, it must be go through bank(intermediary). But this is not the case of Cryptocurrency. You can easily transfer ANY VALUE from one WALLET TO ANOTHER WALLET EASILY with NO INTERMEDIARIES(without BANK).
Who developed Bitcoin?
->>> BITCOIN was developed nearly 8 years ago(IN THE YEAR 2009) by a programmer named SATOSHI NAKAMOTO(Japanese Programmer). But none know who is SATOSHI NAKAMOTO.
What is the value of Bitcoin in 2009?
->>>Bitcoin was worth $0 in the year 2009 during its very first year of existence. But now its nearly equals to $17k and it will easily go up.
When did the first bitcoin transaction happened?
->>> It taken place in US, who offer 100BTC for PIZZA in 2009.
Is cryptocurrency Legal or Illegal?
->>> There is lot of questions on its legality in different countries like legal or illegal. Some countries already declared as legal and some countries LIKE MICROSOFT started accepting BITCOIN as payment.
Is it legalised in India?
->>> Not at present. For this the government created a committee to give report on cryptocurrency to be legal or illegal.
What if i invested into bitcoin?
->>> if you invested into bitcoin and Indian government says cryptocurrency is illegal, then you need to sell it and there will be high pressure and the prices will go down by this. This is also risk.
Can i hold it(Bitcoin) for Long Term?
->>> As per me its risky to hold bitcoin or any other cryptocurrency for long term because there are no any underlying assets(know from here: https://www.investopedia.com/terms/u/underlying-asset.asp). Its better to go for short term. As cryptocurrency is game with high risky and high gain. It changes from time to time. But this is not in the case of shares that you hold in any company. The risk in share is totally different than a risk in Cryptocurrency(Bitcoin). The prices of share may go up and but it never goes to zero. But this is not in the case of Crypto(Bitcoin).
If i purchased bitcoin earlier and if i gain something from it will it taxable in India?
->>> There is No specific provision under Income tax Act and taxation of cryptocurrency remains grey as on date. Since cryptocurrencies are not legal tender declared by RBI. So, it shall be treated as ASSET. Now it is solely depends upon the intention of the person whether it is INVESTMENT or TRADING ASSET. If its Investment, then it is chargeable under the Head CAPITAL GAINS. For other ASSETS(like Cryptocurrency) if you are holding it for LESS THAN OR EQUAL to 36months(3years) it comes under STCG(Short Term Capital Gain) and if you are holding it for MORE THAN 36months(3years), it comes under LTCG(Long Term Capital Gain) and moreover you will get Indexation for such long term holding. If you are a TRADER, it will be chargeable under the head PGBP(Profits and Gains of Business or Profession). Any property whether held for business or profession is an CAPITAL ASSET.
For Instance,
Example 1: if you purchase BITCOIN for Rs. 10,00,000 and you sold it for Rs. 20,00,000, then the Gain(10,00,000) will be taxable under the head Capital Gains or PGBP. If its Long term Capital Gain, then you will get Indexation benefit.
Example 2: If you sold good worth Rs.11,00,000 and you got 1 BITCOIN(Rs.13,00,000, here you need to take Fair Market Value in calculation) in return. Then the Gain(Rs. 2,00,000) will be taxable under the head PGBP as it earned in Business. Later you sold the 1 BITCOIN @ Rs. 20,00,000, then the Gain(Rs. 7,00,000) will be taxable under the head CAPITAL GAINS or PGBP as the case may be.
Example 3: If you purchased goods worth Rs. 12,00,000 and you paid 2 BITCOINS (lets say your cost to it is 10,00,000 which you already bought it). The Gain(Rs. 2,00,000) is taxable under the head CAPITAL GAINS( If you Invested in BTC earlier) or PGBP(if you got BTC by Trading)
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