18% tax on Bitcoin (BTC) transactions being considered by the Indian government
A proposal to impose an 18 percent GST on BTC transactions is now being considered by the Indian government.
Tue, 29 Dec 2020, 17:19 pm UTC
India is reportedly mulling on the possibility of imposing an 18 percent tax on Bitcoin transactions. Experts estimate that such a taxation scheme could bring in around $1 billion in revenue to state coffers.
On Tuesday, the Times of India reported the Central Economic Intelligence Bureau (CEIB) proposed the imposition of an 18 percent goods and services tax (GST) on Bitcoin transactions, according to Bitcoin.com. “CEIB has suggested that bitcoins can be categorized under ‘intangible assets’ class and a GST levy could be imposed on all transactions,” the local news outlet reported.
The agency also suggested the treatment of crypto as current assets as well as the imposition of GST on trading margins. CEIB, an arm of the finance ministry, submitted the proposal to the Central Board of Indirect Taxes & Customs (CBIC).
The annual value of Bitcoin transactions in India is estimated to be INR 40,000 crore or around %5.5 billion, according to Cointelegraph. An 18 percent GST on all BTC transactions would mean $1 billion in tax revenue.
Some of India’s top crypto exchanges say that such a taxation scheme could be good for the country’s cryptocurrency industry. “Government mulling a tax structure is a sign of better understanding of this novel asset class and we are hopeful that this would lead to more positive news going forward,” CoinDCX CEO Sumit Gupta said. “Regarding the tax rate, and structure is something that we’ll wait and watch, but this is definitely a positive sign.”
Nischal Shetty, CEO of the Binance-owned WazirX crypto exchange, said that the regulatory clarity in the industry could encourage institutional participation in the market. WazirX and Bitbns, an exchange based in Bangalore, are already paying GST on trading fees.
Meanwhile, blockchain lawyer Varun Sethi is not surprised that the Indian government is already considering the taxation of cryptocurrency. “Had to happen,” Sethi said. “While it gives legitimacy to trades but preferably government should have clarified the nature of it. Either as [a] digital asset or commodity or security.”
However, Sethi is questioning the tax rate being used in CEIB’s proposal. He said that “all trades ideally shouldn’t have 18% GST attraction” and added that “18% should ideally be for service-based income.”
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