Right now, Bit coin is neither legal nor illegal in India.
Meanwhile, the government wants to closely scrutinise profits made during the bitcoin boom. After a survey of cryptocurrency exchanges last month, the income tax department is now reportedly set to send out notices to about 500,000 investors who profited from the virtual currency boom but did not pay taxes on their gains. Money laundering and funding of illegal transactions via these cryptocurrencies has been another area of concern for Indian regulators.
The government has also constituted a committee to suggest a framework for regulating these virtual currencies and to understand their current structure and legal implications. Till then, it's virtually a bit of a haze.
https://qz.com/1171183/bitcoin-is-neither-legal-nor-illegal-in-india-and-everyones-confused/
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