Investors who consider starting a company in India in the field of cryptocurrency should take into consideration that the country recognizes only blockchain activities. Cyptocurrency in India is not considered a legal tender, as mentioned by the local authorities in the Indian Budget 2018. However, it is important to know that regardless of the current view on cryptocurrency activities, India has been experiencing an increasing number of employees operating in this sector. The rate of employees operating in cryptocurrency-related activities increased by 290% in the last six months of 2017 and our team of specialists in company formation in India can advise on this matter. We are also at the service of investors who want to apply for a crypto license in India.
Current view of cryptocurrencies in India
Although the Indian government has expressed its view on cryptocurrencies, which are not seen as a legal tender on the country’s territory, it does not mean that such activities are illegal, as, at the moment, there are no specific regulations addressing this new sector.
At the moment, holding assets such as Bitcoin and other similar virtual currencies are not prohibited in India. Still, it is necessary to know that virtual currencies can’t be used as a payment system in India, but the local authorities are highly interested in sustaining blockchain activities.
Blockchain is seen as a trustworthy mechanism, due to the fact that all the parties involved can have free access to an updated transaction. Indian representatives consider that blockchain technology can be the most suitable option for starting a digital economy. Our team of consultants in company registration in India can offer further assistance on the main advantages of investing in blockchain technologies.
Opening a cryptocurrency business can start with the purchase of a virtual office in India to use as a legal address.
New crypto regulations in India
In 2019, the first draft law called the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill was created. Unfortunately, it banned all transactions related to cryptocurrencies. This way, the creation of cryptocurrency companies in India would have been limited to activities, such as mining. However, in 2021 a new draft bill was enabled, this time providing for better prospects for those interested in operating in this sector. The Cryptocurrency and Regulation of Official Digital Currency Bill provide the legal framework for the creation of an official virtual token that will be issued by the Reserve Bank of India.
Moreover, it is highly possible for companies to be able to apply for cryptocurrency exchange licenses in India. The law has not been passed yet, however, it is expected to. Until then, on February 1st of 2022, the government acknowledged cryptocurrencies as Virtual Digital Assets (VDA) and also provided specific provisions related to their taxation.
If you decide to open a cryptocurrency company and apply for a crypto license in India at this point, our company formation consultant will help you.
Are there special conditions to open a cryptocurrency company in India?
Until the draft law is passed, there are no special conditions to respect in order to start a cryptocurrency business in India. No matter if you are a local or foreign entrepreneur, you must first comply with the 2013 Companies Law. Apart from this, in light of paying the taxes applied to VDAs, you must also complete several formalities, among which:
- obtain a Permanent Account Number (PAN);
- apply for a Tax Deduction and Collection Account Number (TAN);
- obtain a Goods and Services Identification Account Number (GSTIN).
Apart from these, applying for the crypto license in India may become mandatory for certain activities, such as the issuance and trading of various VDAs.
If you want to know more about how to form a company in India, feel free to address our local consultants.
Requirements for crypto exchanges in India
After obtaining a crypto license in India, it is possible to set up virtual money exchanges, however, these will be required to disclose information about their profits and losses, the amounts held in cryptocurrencies, as well as the deposits made by clients. Apart from these, all Indian crypto exchanges must draft Know-Your-Client policies and keep information on the traders and customers operating on their platforms.
Feel free to address our company registration advisors for more information on the requirements cryptocurrency exchanges must comply with in India.
What is currently known about the crypto license in India
The latest data on cryptocurrency companies in India was made available in March 2022, however, up to that date, there are no specific requirements related to obtaining a cryptocurrency exchange license. Even so, with so many regulations in place, it is expected for platforms to be required to apply for such licenses in the future.
For updated information, you can always get in touch with our agents.
Increasing employment in India
Businessmen who want to register a company in India in this nascent sector should also hire employees. India follows the global trend related to this subject, as mentioned above. There is a high demand for specialists who can understand the procedures involved in cryptocurrency, blockchain, and initial coin offering activities. Persons looking for a job in this new industry are also keen on finding suitable job openings related to blockchain activities. India benefits from a large employment market, which offers numerous specialists in the field of IT and related sectors, who can be suitable employees for blockchain companies.
Taxation of cryptocurrencies in India
According to news, the following have already been established in relation to the taxation of cryptocurrency:
- profits made from crypto transactions are imposed at a rate of 30%, as decided in April 2022;
- these companies will probably also have to pay the Goods and Services Tax at a rate of 28%;
- a 1% tax deduction at source will also be available on any transaction completed by such businesses.
Businessmen can address to our team of consultants for in-depth assistance related to this subject.