Taxability of Cryptocurrency in India
![handle is hein.journals/ijlmhs19 and id is 1639 raw text is: International Journal of Law Management & Humanities
Taxability of Cryptocurrency in India
MUSKAAN SINGH'
ABSTRACT
This paper aims at a multi-pronged analysis oflndia's present policy regarding block-chain
technology and cryptocurrency, and the creation of a sustainable model outlining the
structure of a proposed regulatory framework. Herein, India's behaviour and attitude
towards technology are studied in light of official statements, infrastructural development,
and legislative action with respect to blockchain, and the present policy is inferred to be
observational in nature and may also be referred to as a 'wait-and-watch' policy. The
present paper focuses on the taxability of crypto-assets in India. The nature of
cryptocurrency for regulatory purposes in the suggested framework is proposed to be two-
fold. This would depend on the purpose for which virtual currency is utilised, either by
consumers, trading platforms, exchanges, etc., that is, on time-based usage.
Keywords: virtual currency, trading, taxation, bitcoin, cryptocurrency
I. INTRODUCTION
A type of unregulated digital currency is a virtual currency. A central bank does not issue or
control it. Bitcoin, Litecoin, and XRP are examples of virtual currencies. Digital currencies are
digital currencies that are stored in and transacted through specific software, applications, and
networks. Private issuers typically issue virtual currencies, which are used within specific
virtual communities. The security of the software and networks that support virtual currencies
is a major concern. The categories for the classification of virtual currency thus identified are:
1. Capital Assets
Capital assets are defined under Section 2(14)(a) of the Income Tax Act 1961 (hereinafter 'ITA,
1961') as, property of any kind held by an assessee, whether or not connected with his business
or profession .
Virtual Currency is hence proposed to be treated as 'property held by an assessee ' thus making
crypto holdings taxable as capital assets under the ITA, 1961. It is submitted that virtual
currencies ought to be considered a 'digital asset' for non-trading purposes. Under the suggested
framework, this would include crypto holdings for investment purposes.
1 Author is a student at UPES Dehradun, India,
© 2022. International Journal of Law Management & Humanities [ISSN 2581-5369]
1498
[Vol. 5 Iss 5; 1498]](ViewImageLocal?handle=hein.journals/ijlmhs19&div=129&collection=&method=preview&ext=.png&size=3)
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