Today, the world is taken by storm with Bitcoin being in news and attracting a lot of investors. It has become a craze all over the world and is becoming a hit with a lot of Indians too. More than $3.5 billion worth of transactions in the crypto currency have been conducted in India over 17 month period according to the income tax department. With this, a lot of questions arise in the minds of investors regarding Bitcoin and the SIP investment planning. So, let us understand both the terms with some facts: What does Bitcoin and SIP mean in the layman’s term? Bitcoin is a digital and global money system. It allows people to receive or send money across the internet. The common terms used for Bitcoin are crypto currency, digital currency, digital cash, virtual currency, or electronic currency. A SIP or Systematic Investment Plan on the other hand is a smart and hassle free mode for investing money in mutual funds. It allows one to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.). Are bitcoin and SIP real money? Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as currency. But the question whether it is a currency or not is still disputed in the world. As far as India is concerned, Mr. Arun. Jaitley ( finance minister ) has clearly stated in his speech at the parliament’ s winter session that India does not accept Bitcoin as a currency in India. SIP is an approach towards a systematic investment which helps to inculcate the habit of saving and building wealth for future. How are Bitcoin and SIP investments taxed in India? Bitcoin taxation are done in three different ways, Bitcoin earned through mining, Bitcoins purchased from Bitcoin exchange, and Bitcoin received in return for sale of goods or services i.e taxed as profit from business according to individual tax slab ( applicable on income). The concept of Bitcoin being new to the Indian market, the government has yet not come up with specific guidelines on books, but the Income tax laws are applied on Bitcoin. Infact, Income Tax (IT) department planned to send notices to 4 - 5 lakh high net worth individuals (HNI) across the country who are trading on these virtual currency, the PTI report. SIP, on the other hand, if you invest in ELSSs, which are approved by the government for saving taxes, investors get tax benefits under section 80C of the Income Tax Act. Are Bitcoin and SIP investments legal in India? The CIS ( India’s leading Internet organisation) have published a research post on their website stating that Bitcoin is not illegal under any existing laws. The government of India has not laid down set rules or guidelines for Bitcoin as a medium of payment as yet. There are no laws resolving the disputes that could arise while dealing with Bitcoins. Hence , Bitcoin transactions come with their own set of risks. So, these exchanges have observed a lot of fire in India. The nation’s top banks have suspended or greatly curtailed functionality on exchange accounts. State bank of India, Axis bank, HDFC bank, ICICI bank, and Yes Bank have all taken strong action towards crypto currency. Additionally, the ministry of finance referred to Bitcoin as a Ponzi scheme. SIP investments are subject to markets risks, one could lose money in the short to medium term because of market fluctuations . Apart from the risk, these SIP investments are legal in India and are looked upon as a great wealth generator.