Indian Govt. May Levy 18% GST on Cryptocurrencies

The scenario of cryptocurrencies and the dealings in India has been in trouble for quite some while now. With RBI officially sending statements to the banks to de-authorize their clients from any cryptocurrency purchases, another news has come up.

According to a news report by Bloomberg, the Government of India is set to levy Goods and Services Tax on cryptocurrency trading, according to people with direct knowledge of the matter, even as there’s lack of clarity about their legal status in the country.

The government might impose an 18% GST on Cryptocurrencies as they feel that the status of cryptocurrency is unclear in India. The proposal is being examined by the Central Board of Indirect Taxes and Customs. The same will also be seen and analysed by the GST Council before coming up to a conclusion.

As stated, the digital asset could be classified under “intangible goods,” on par with other software systems, with the authority adding that separate laws would be introduced to deal with the usage of cryptocurrencies for criminal activities. Although according to them, the decision of the panel to levy GST on digital currencies might be useful in regulating digital currencies.

Currently, India hasn’t officially banned or legalized virtual currencies, but the Indian government has, on multiple occasions, pointed to the risks involved. The Reserve Bank of India in April barred lenders from dealing with entities trading in cryptocurrencies, giving them three months to unwind business but Crypto exchanges, however, moved the court against the directive.

In December 2017, the Indian government’s crackdown on the cryptocurrency market saw both exchanges and traders being scrutinized for dealing with and making money on digital assets. Legal authorities also sent a tax notice to over 500,000 traders, in a bid to collect huge taxes from their gains.

According to the new parameters on taxing cryptocurrency, it states,

• Mining will be treated as a supply of service since it generates cryptocurrency and involves rewards and transaction fees, according to people aware of the matter. Tax should be collected from the miner on transaction fees or reward, and if value of the reward exceeds Rs 20 lakh, individual miners will have to register under GST
• The proposal also considers Wallets storing keys to be taxable
• The wallet service providers should be registered under GST. Cryptocurrency exchanges need to register and also pay tax on their earning.

The government might start levying Goods and Services Tax on cryptocurrency trading from July 1, 2017. Although, there has been no decision been taken on it as of now.

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