India’s Leadership Mulling 18% GST Tax on Crypto
The Indian government is contemplating whether to impose Goods and Services Tax (GST) on cryptocurrency trading and mining. If said tax is imposed, domestic Indian cryptoverse denizens most certainly won’t be pleased, especially if applied retroactively to crypto activities.
Crypto Traders Take the Bitter With the Sweet
The Central Board of Indirect Taxes and Customs may categorize cryptocurrencies as “intangible goods on a par with software” to further impose 18 percent GST on crypto trading, anonymous sources close to the matter told Bloomberg.
Once finalized, the proposal will be put forward to a specialized council for further consideration. Taxing cryptocurrency as goods and services would be easy for the government per existing laws, whereas taxing it in the manner of securities would demand legislative changes.
As the proposal outlines:
“Purchase or sale of cryptocurrencies should be considered as a supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services.”
The Indian government have failed to comprehensively decide on the legal status of cryptocurrencies to date. Looking at the bigger picture, taxation on crypto trading may help foster mainstream adoption in the country and is clearly better than an outright ban.
According to the proposal, to determine taxable amount, crypto value will be calculated in rupees or another other foreign currency. If the exchange of digital currency occurs within the Indian territory, then the transaction will be accounted as “supply of software.” However, transactions occurring beyond the Indian territory are accountable to “integrated GST.”
Retroactive Taxation a Major Blow?
Per the proposal, the Indian government is mulling over retroactive tax measures on crypto trading starting from the day GST came into effect. No final decision has been made yet, the informants noted.
Cryptocurrency mining would be considered as “supply of services,” wherein the government would levy a tax on transaction fees and rewards. Crypto mining activities that make more than Rs 20 lakh (approx. $30,000 USD) annually in rewards would be liable to register under GST. Moreover, local and foreign cryptocurrency exchanges would also be subject to taxation on commissions in accordance with the regulations.
Taxing crypto trading is not the Indian government’s first painful move this year. Earlier, the nation’s central Reserve Bank of India interdicted financial institutions it regulated to discontinue facilitating crypto businesses, giving domestic banks three months’ time to square their deals with crypto firms.
Several crypto enterprises have challenged the authoritarian ban at the highest level of the Indian judiciary system, the country’s Supreme Court.
Will the Indian government move forward with the proposal and levy taxation on crypto trading? Would that be good, bad, or ugly? Share your views in the comments section.
Images via The Telegraph, Hindustan Times