Bitcoin is still a confusing idea for many people, but its surging value over the last few months has had everyone paying attention again. As big as $40,000, the value of Bitcoin soared (roughly Rs. 29.2 lakhs). It still remains unpredictable, however, and we saw Bitcoin slip by 26 percent on January 11 in its largest plunge since March 2020. Although Bitcoin may seem like an excellent investment, before you take the plunge, it’s important to do your homework. Experienced investors who know what they’re doing will not have to be told this, but it can be quite risky for beginners.
Before you start investing, it is crucial that you find the right places to make this investment and understand the legal and tax consequences of investing in Bitcoin. We can’t give you legal advice but here’s what we’ve been able to read, to get you started in Bitcoin.
How in India do I buy Bitcoins?
You may purchase Bitcoin from several online exchanges in India, such as BuyUCoin, Coinshare, Unocoin, etc. Unocoin is an exchange located in India. Online exchanges such as these would allow Bitcoins to be purchased, sold, and kept. Using LocalBitcoins, you can also do Bitcoin trading from person to person, using escrow security to keep the transaction secure.
Usually, it is best to use an exchange that allows its users to also withdraw their Bitcoins for safe keeping in their own personal wallet. There are exchanges that do not allow this.
And it goes without saying, but let’s say it anyway, it is important to use secure Internet practices like the use of two-factor authentication and unique and strong password when creating an account on online exchanges.
Most Indian exchanges also have a specification for KYC (Know Your Customer). This approach includes checking your identity using your government-issued ID cards such as an address certificate, PAN card, and details of your bank account.
You can buy Bitcoin using digital payment methods once you place an order. You can move money from your bank accounts via NEFT, RTGS, debit or credit card. One Bitcoin is priced at $35,563 (roughly Rs. 26 lakhs) as of today, but you don’t need to buy a whole coin to launch your Bitcoin investment. By chipping in as low as Rs. 500, you can initiate your Bitcoin investment.
In India, is it legal to purchase Bitcoins?
In 2018, the RBI prohibited the handling of Bitcoin by controlled entities (such as banks). It threw the industry into a tailspin. The Supreme Court also backed this ruling later in the year. The SC, however, reversed the ban last year. Although it has never been made illegal to carry Bitcoin, the SC decision ensures that businesses in this space can do business more easily.
Cleartax also noted that there are no laws, legislation, or guidelines in place to settle conflicts that may occur while dealing with Bitcoins. In dealing with India’s cryptocurrency, this amplifies the risk factor. It is legal, however, to purchase and sell Bitcoin in India.
How do I make sure my Bitcoin is securely stored?
You have to ensure that you store it securely after purchasing Bitcoins. These are normally kept in Bitcoin wallets, which can be offline storage, such as a USB drive, called cold wallets, but you can also use online wallets, like, most recently, PayPal, called hot wallets. In the past, even Bitcoin wallets have faced numerous attacks, which is why many people prefer to hold a cold wallet with at least part of their investment.
What are the taxes that I need to think about if I own Bitcoins?
On the tax front on Bitcoin investments in India, there is still a lack of clarification. India-based investors may soon have to pay taxes on returns received from Bitcoin investments, according to CoinDesk, a digital currency news website.
With the growing value of Bitcoins, Bitcoin sales revenue is taxed on long-term investments at a 30 percent tax on cryptocurrency gains for short-term investments at about 20 percent. You don’t have to pay money, however, as long as you don’t sell Bitcoin, simply because its value has risen.