Cryptocurrency is a digital asset used as a medium of exchange for goods. It uses a cryptography method to secure transactions on its platform. This avoids a public interference from a banks, friends and family. It is one of the advantages of cryptocurrency but others include low exchange and interest rate. Bitcoin is the first and earliest form of cryptocurrency in the world. In 2009 bitcoin was the first ever cryptocurrency to be created.
The world would soon witness a fast increase in the number of other forms of cryptocurrency. Some few popular branches of which include litecoin, ethereum and zcash. Governments are slowly increasing efforts to move towards a cashless economy. Indians have welcomed this move and have began using it recently. However, it remains unmanaged by most central authorities in the world.
This bitcoin uses block-to-block technology. It helps in tax-free cross-border transactions and transfers hence promoting international trade. Bitcoin currency can be obtained in any of these two major known ways. This includes mining which is a process whereby an individual called a miner uses computer based knowledge to solve extremely difficult puzzles. The problem solving process helps to maintain the block chain technology.
An individual miner in return gets new bitcoins on the account. Secondly another method is by purchasing them from a bitcoin exchange against real currency. We should understand that not everyone else can be a miner. An alternative to this is buying bitcoins from bitcoin exchange to keep them in an online bitcoin wallet. This includes coin base and zebpay wallet on a digital platform.
Bitcoin is accepted and not illegal in India. As a matter of fact the supreme court of India in its ruling on the 25th of February 2019 adviced the government. They wanted them to make some few regulation policies on cryptocurrency. This cashless system is completely new to the Indian government and its citizens. As such the government is seeking ways in which perhaps it can be taxed. One measure they are looking to put in a place is stock-in-trade. This means that the income coming out of the online trading activity would ultimately give rise to business growth.
Every worth while business is expected to make at least some profits. These profits would be subjected to tax depending on business performance. Another way is that bitcoins will be received as consideration on sale of goods and services. After this they’d be treated on per with receipt of money. The one getting the income out of a personal business or profession, government shall tax normally according to profits made.
Last but not least capital generated assets when sold would in a normal case give rise to capital gains. However, it is important to note that the cost of acquisition of a bitcoin cannot be determined. Pursuing this further it does not fall in the Indian constitution which specifically defines the cost of acquisition of self-generated assets. As we move towards a new era of cashless transactions we are all encouraged to use these platforms. Payments made to your account is very instant and can be helpful in case of an emergency.