Is Bitcoin income taxable in India?

Yes and No. Taxation of bitcoin income depends on the source of bitcoin generation.

Long answer:

We should first understand a little background on bitcoin before getting into the taxation part.

What is Bitcoin?

Created in 2009, bitcoins are the first anonymous decentralized digital currency. They are digital coins that you can send through internet. Meaning, it is digital money having no physical form.

While RBI has not given licence to any company to trade in bitcoin, no law makes the bitcoin trading illegal in India.

Sources & Taxation of bitcoin:

There are actually 3 ways in which you can earn bitcoin & the taxation differs from one to another. You can get bitcoin by:

1. Mining them
2. Purchasing them from bitcoin exchange for real money
3. Receiving them in return for sale of goods or services

The taxation for the bitcoins earned through the above methods is as follows

1. Bitcoins earned through mining - No tax (This may change in the near future. Check this out for detailed information)
2. Bitcoins purchased from bitcoin exchange
1. Bitcoins held as investment being transferred in exchange for real currency are taxed under long term / short term depending on the holding period
1. Long term(>3 years) - Flat 20% tax
2. Short term(< 3 years) - Taxed according to your individual tax slab rate ((Applicable on your income))
2. Bitcoins held as stock-in-trade being transferred in exchange for real currency are
1. Taxed as profit from business according to your individual tax slab rate (Applicable on your income)
3. Bitcoins received in return for sale of goods or services - Taxed as profit from business according to your individual tax slab rate (Applicable on your income)