Answer: According to the Income Tax Department, if your business deals in cryptocurrency then it falls under the head ‘Profits and Gains of Business or Profession and is taxable under the provisions of the Income Tax Act.

A cryptocurrency is a digital currency. It is generated and stored electronically in the blockchain, using encryption techniques to control the creation of monetary units and to verify the transfer of funds. The most widely known cryptocurrency is bitcoin.

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Since the cryptocurrency is not yet legalized by the Reserve Bank of India (RBI), it cannot escape from taxability. An investor earning profits from the sale of cryptocurrency must pay income tax. All incomes, except exempted explicitly by the Income Tax Act, are subject to tax.

Categories: Cryptocurrency