Legal formalities to buy bitcoins from abroad for sale in India
LEGAL FORMALITIES TO BUY BITCOINS FROM ABROAD AND SELL IN INDIA If I buy Bitcoins from a foreign country & sell it here in India (for arbitrage purpose), it will be like importing foreign goods & selling it in your country. So, what legal formalities like obtaining a specific license, filling forms etc will I have to do in order to do avoid any legal issues? Also kindly throw some light on taxation.
Kindly find the answer to the first query:-
First of all when there is any foreign element regarding any kind of Exchange then FEMA Act and RBI regulations would be attracted as any transaction has to be done by following this particular provision of this Act. Now, transferring the bitcoin to India or selling the bitcoin which are purchased from abroad would be illegal; as Bitcoin is known as digital currency or virtual currency. Now, for this RBI issued an advisory to the public not buy and sell virtual currency and RBI not permit such transactions available at https://economictimes.indiatimes.com/industry/banking/finance/2500-indians-investing-in-bitcoins-daily-here-is-all-you-should-know-about-bitcoins-its-usage-dangers/articleshow/58719151.cms. However, The term Currency is defined in section 2(h) of the Foreign Exchange Management Act,1999 but the definition doesn't talk about Digital or virtual in nature. In other words, it would not be permitted under the FEMA, Act. Secondly, it is not considered as security or any kinds of goods also as according to the definition in Section 2(h) of The Security Contract (Regulation ) Act, 1955. Now, the formalities and other things would arise when there is already a law on it but when there is not comes under the above definition then it would be considered as illegal, and coming to the taxation part, I would advise not to sell in India, as once you will sale in India it can seize by the Indian government and therefore, there is no point of taxation which would be coming in picture.
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