Proposed ban to taxation: Mapping India’s Cryptocurrency regulatory evolution

The legal status of cryptocurrencies like Bitcoin in India has seen several developments but remains complex as regulations evolve. Some key aspects:

1. Cryptocurrencies are not legal tender in India currently. As per the Reserve Bank of India (RBI), virtual currencies lack official backing and regulatory oversight.
2. There is regulatory uncertainty due to lack of specific legislation governing cryptocurrency usage and trading. This vacuum has impeded crypto business growth locally.
3. In 2021, the Indian government proposed banning private cryptocurrencies and launched a Central Bank Digital Currency (CBDC). However, the bill awaits passage amid ongoing debate.
4. A 2020 Supreme Court verdict overturned an RBI ban, deeming crypto investments legitimate. But taxation and other issues require further clarity.
5. Recent income tax modifications brought virtual digital assets (VDAs) like crypto under tax nets, conferring some legal recognition. But comprehensive regulations are still lacking.

While not outlawed currently, cryptocurrencies exist in a legal grey area in India. Investors can transact in VDAs but face uncertainties without dedicated regulations in place. The legal outlook hinges greatly on the impending crypto bill and clarity from policymakers.