The Indian government is reportedly considering imposing an 18% goods and services (GST) tax on Bitcoin transactions. According to the Central Economic Intelligence Bureau, the government could earn 7,200 rupees annually from this bitcoin tax.
18% GST on Bitcoin trades
The Central Economic Intelligence Bureau (CEIB), a branch of the Treasury Department, has proposed to impose an 18% tax on goods and services (GST) on bitcoin transactions, the Times of India reported Tuesday.
The CEIB, which acts as the finance ministry’s think tank, recently conducted a study on the collection of GST on cryptocurrencies. The office told the Central Board of Indirect Taxes & Customs (CBIC) that taxing Bitcoin trades would allow the government to earn Rs 7,200 ($ 981 million) annually. The publication quotes sources from the Treasury Department and includes the following details:
CEIB has proposed dividing bitcoins into the class “intangible assets” and charging a GST tax for all transactions.
“The board has suggested that the cryptocurrency can be treated as a short-term asset and GST that counts towards margins made in trading,” the news agency repeated.
This is not the first time the Indian government is considering charging GST for cryptocurrency trading. In May 2018, sources also told Bloomberg that the government was considering 18% GST for cryptocurrency transactions.
Commenting on the Bitcoin tax news on Tuesday, blockchain attorney Varun Sethi said, “Had to happen. While it gives legitimacy to trade, the government should preferably have clarified the nature of the trade. Either [a] digital asset or commodity or security. “
Sethi added that “all trades should ideally not have 18% GST attraction,” noting that “18% should ideally be for service-based income”. He continued, “Does that mean Bitcoin can be seen as an exchange for services? For everyday traders, this should ideally be treated as commodities trading and attracting capital gains. The attorney also pointed out that India should review the UK strategy paper on crypto assets, stressing that “a random survey of 18% without clarifying the legal position of the crypto trade is highly controversial”.
Tanvi Ratna, CEO of Policy 4.0, believes this tax proposal “doesn’t necessarily imply that crypto is legal”. She clarified: “Under Indian law, illegal income is also taxable and bypasses its tax counts as a criminal activity.”
What do you think of India imposing 18% GST on bitcoin transactions? Let us know in the comments below.
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