India, which is the world second largest country by population, is reportedly planning to give a glimmer of hope to cryptocurrencies and people investing in them. After months of thinking and rationalizing, it seems like India’s government is ready to levy an 18% tax on cryptocurrency trading.
As reported on Bloomberg, the country is planning to put this tax to action soon – putting it under the Goods and Services Tax (GST) on cryptocurrency trading. Currently, the proposal is being considered by the Central Board of Indirect Taxes and Customs and will likely be presented before the GST council after it is carefully reviewed.
If this is made official, Bitcoin could be classified under “intangible goods” and would be on par with other software systems. The authority even added that there may be separate laws introduced in order to deal with the usage of cryptocurrencies for criminal activities.
In April 2018, the Reserve Bank of India killed the cryptocurrency industry, after asking all banks to withdraw their relationships with all cryptocurrency exchanges. However, this may change soon as the Income Tax department realized the importance of taxing virtual currencies.
The proposal’s main points include:
- Purchase or sale of cryptocurrencies to be considered as a supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services.
- Value of a cryptocurrency may be determined based on the transaction value in rupees or the equivalent of any freely convertible foreign currency.
- If buyers and sellers are in India, the transaction would be treated as a supply of software and the buyer’s location will be the place of supply.
- For transfer and sale, the location of the registered person will be the place of supply. However, for sale to non-registered persons, the location of the supplier would be considered as the place of supply.
- Transactions beyond the Indian territory will be liable for integrated GST and would be considered an import or export of goods. IGST will be levied on cross-border supplies.
The proposal seeks the tax to be made official from July 1st, 2018.
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