The government may have outlawed cryptocurrencies, including Bitcoins, in Budget 2018, it will charge capital gains tax on the same.
Profits on Bitcoins will be taxed at 30 per cent if you hold it for less than 36 months, while 20 per cent for staying put beyond 36 months, reported Zee Business in a bulletin.
Investors may have to pay an yearly interest of 12 per cent too.
Meanwhile, if someone is caught hiding their profits, they may have to pay penalty in the range of 50 per cent to 200 per cent.
Finance Minister Arun Jaitley in his Budget speech on February 1 said all crypto currencies, which include bitcoins, are illegal and the government will take all measures to eliminate their use.
"The government does not consider crypto currencies as legal tender or coin and (will) take all measures to eliminate the use of crypto assets...," he said while presenting the Union Budget 2018-19 in the Lok Sabha.
To counter the move, Bitcoin exchanges are planning to create a central repository of users that will help create and maintain a real time record of transactions, reported Economic Times on Tuesday.
The report said the purchase data of buyers and sellers of the virtual currency can then be traced through either the Aadhaar ID or the Permanent Account Number (PAN) of the user.
Details such as the total number of cryptocurrencies held, the value thereof as well as the pattern of buying and selling by individual users will be available through the central repository, the report citing a top industry member said.