Is it legal to buy cryptocurrency in USA and sell in India?
As there are some arbitrage in cryptocurrency exchanges in USA and INDIA , is it legal to send USD to friend in USA and let her buy bitcoin over there and tell her to send those bitcoin to your wallet and later on sell these bitcoins in India?
Scenario is ,
Lets say I transfer 100$ to her US bank account. She buys bitcoin in US crypto exchange and transfer those bitcoins to my wallet. I encash those bitcoins and lets say I get INR equivalent to 105 $ . Then
1. Do I have to pay tax on 105$ or the 5$ earned?
2. And how I can link my 100$ transfer to my friend and 105$ gained by selling bitcoin?
3. If above scenario is possible then what are the documents I will need to support it ?
Asked 12 months ago in Income Tax from Pune, Maharashtra
The thing is my friend is buying bitcoin in her name as only US bank account holder can buy cryptocurrency in US Crypto exchange. and after transferring to me I am selling it and encashing it in my Indian bank account.
I am using same bank account for transferring money to her and selling bitcoin.
So is it legal and I am confused about the amount on which I have to pay the tax.
Asked 12 months ago
Firstly, let me make it clear that trading in Bitcoin is not totally legal in India. RBI has issued a circular saying that who all are trading in crypto currency is doing at their own risk.
From income tax perspective, you need to pay tax on the profit you make out of trading of bitcoin (i.e. USD 5 in above example).
Indian Government has not yet issued any circular about bitcoins, so as of now it is neither legal nor illegal. Either ways you will have to pay in India.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
You will pay tax on $5 and not on the entire $105. There are no laws in India regulating the sale and purchase of bitcoins. So there is nothing illegal in trading in bitcoins as of now.
M.Com., CA, LL.B
CA, Greater Mumbai
Essentially, entire bitcoin trading is illegal in India since it is not approved by RBI. RBI has warned investors to deal at their own risk.
Best to be done is to pay capital gains on such transactions.