Bitcoin Exchanges In India Seeking Clarity On GST Rate, 18% or 12% ?

by | Jan 6, 2018 | Bitcoin, Cryptocurrency News | 0 comments

Bitcoin Exchanges In India Seek Out Opinion Of Authorized Bodies In Regards To GST Implementation

Bitcoin Exchanges in India seems to be pretty confused about the taxation structure of the crypto periphery in regards to taxation slab and imposing the same on operating revenues and margins. Once a taxation law is passed in this regards, the bitcoin exchanges would have to shell out more than $1 billion to the Taxation body of India.

Economic Times, a leading Indian business daily has revealed that seven of the biggest bitcoin exchanges in India including Zebpay, Unocin and CoinSecure are planning to approach the AAR or Advance Authority of Ruling for seeking out an answer to their queries regarding the taxation structure of cryptocurrency dealings. The exchanges wish to ascertain if they need to file tax returns under the Goods and Service Tax (GST) segment which has been heralded as the biggest indirect tax makeover in India in 2017. With authorities struggling themselves regarding the path of action, it is highly unlikely that the exchanges shall get their queries answered anytime soon.

Apart from the taxation structure, the Indian lawmakers are also struggling with the establishment of clear cut guidelines which will regulate the flow of virtual currencies in the national market. A source having first-hand knowledge regarding the approach to be made by the consortium of exchanges to AAR was quoted as saying:

“At least one Bitcoin exchange has filed an application with the [west Indian state] Maharashtra AAR for future tax liability. The tax department is currently researching the concept as Bitcoins are a very complex subject.” 

This development comes in the aftermath of searches being conducted by the income-tax department of India in December on the functioning of top Bitcoin exchanges. The tax authority had for long been in the lookout for ways by which Bitcoin can be brought under the GST umbrella. An investigation was launched by the VAT and sales tax authorities last year in regards to taxability of Bitcoins. Bitcoin shall be exempted from all taxation if its gets classified as a currency under the Indian Taxation structure. In such a case, the Bitcoin exchanges shall not be liable to shell out any taxes. However, if its gets classified as a good, then 18% tax shall be levied on the Bitcoin exchanges under the new GST regime. Alternatively, on being classified as service, the exchanges shall be subject to 12% taxation.

The official taxation authority of India is all set to issue notices to 500000 HNI or high net-worth individuals asking them to pay capital gains tax on bitcoin trade and investment entered into by them. Abhishek A Rastogi, a partner at law firm Khaitan & Co, revealed to Economic Times that there lies much contradiction regarding the applicability of GST either on the total revenue figure or simply on margins earned. He added that:

 “the tax authority must give clarity on whether bitcoin exchanges are selling goods and services, or are mere trading platforms that earn margins.”

After reviewing the balance sheet of the exchanges last month, one tax official revealed that:

“The combined revenue of top seven players would be around ?40,000 crore (approx. $6.3 billion] and they operate at about 20% margins. In most cases, whenever there is a ‘buy’ or a ‘sell’ order on their platforms, these exchanges charge huge differences, in the range of about Rs 1lakh.”

If this turns into reality then the Income Tax department of India can gain a massive ?7,200 crores, out of tax revenues. Whereas some of the exchanges have submitted highly questionable data, others have not been much supportive in revealing the balance sheets and other financial statements to authorities and some have not even paid value added or sales taxes till date. “When we compared the annual results and explanations submitted to the sales tax and VAT authorities, they were diametrically opposite,” the tax official said.

MS Mani, partner at Deloitte India revealed that, “the option of proceeding with advance rulings under GST should be exercised to enable clarity on future tax treatment, more so in cases where existing tax positions are untested.”

Industry insiders revealed that Bitcoin players such as Indian trading platforms earned a lion’s share of their revenue courtesy transaction fees, commissions and price-arbitrage opportunities. Most of these exchanges allow trading in multiple forms of cryptos however Bitcoin has taken the shape of one of the most popular digital token used rapidly for fostering online payments without the involvement of financial institutions or middlemen. I

Indian government had drawn links in between crypto investments and Ponzi schemes while refusing to impart the tag of being a legal tender to bitcoin. But one thing is for sure and that is the Indian taxmen are waiting anxiously to bite chunks off the ever-swelling profit kitty following the stratospheric growth of bitcoin in 2017.

KryptoMoney.com publishes latest news and updates about Bitcoin, Blockchain Technology , Cryptocurrencies and upcoming ICO’s.

Subscribe to our newsletters and join our Telegram Channel to stay updated.

Get Latest Bitcoin and Crypto News

bitcoin news telegram channel | cryptocurrency news telegram channel | ico news telegramc

Comments

comments

Get latest Bitcoin & Cryoptocurrency News

 

Subscribe to our newsletters to get latest Bitcoin and Cryptocurrency news.

Thank you !