Much needed good news about cryptocurrency future in India finally came out. Following in the footsteps of other nations, India is set to regulate crypto business within the country. This news came after lot of negative speculations in the market about India policy making about crypto ban.
Move Subject to Council’s Approval
Bloomberg a trusted online news partner writes, India may soon levy an 18 percent Goods and Services Tax (GST) on cryptocurrency trading, notwithstanding their legal ambiguity in the country. As of now, the proposal is being presented to the Central Board of Indirect Taxes and Customs and shall be presented before the GST council after it’s finalized.
Moreover, the digital asset could be classified under “intangible goods,” just like other software systems.
Previous Government Strict Actions:
In December 2017, the Indian government scrutinized both crypto exchanges and traders which resulted in a major downfall in the crypto prices. Indian tax department had also sent legal tax notices to about 5 lakh active cryptocurrency users in an attempt to collect taxes from their short-term gains.
In April 2018, the worst ever setback came to the crypto industry in India when Reserve Bank of India asked all banks to withdraw their engagement with all cryptocurrency exchanges, including ending all banking services within three months of the directive.
Soon this month we can see Indian PM, Modi said that he believes in Cryptocurrency.
Major Points of The Tax Proposal:
Since some of the Indian banks including icici ready to set using ripple for a financial settlement. Income tax department has to realise the need of taxing virtual currencies. However, the news is not verified till now.
All we can hope is that council approves the bill and crypto business come under tax category.
Below are the proposal’s major points:
- The first point says, any sale or purchase of cryptocurrencies to be considered as a supply of goods, and those promoting transactions like supply, transfer, storage, accounting, among others, will be treated as services.
- The net worth of a cryptocurrency may be determined based on the transaction value in Indian rupees or the equivalent of an foreign currency.
- For buyers and sellers of 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. But for sale to non-registered persons, the location of the supplier would be considered as the place of supply.
- Transactions beyond the Indian border will account for integrated GST and would be considered an import or export of goods. IGST will be levied on cross-border supplies.
- And the point to be noted is that the proposal agrees to impose GST from July 1, 2017 – the same day when the government asked to end bank relationships with crypto-exchanges.
Cryptocurrency Mining also Taxable:
Cryptocurrency mining which is becoming more and more famous in India nowadays which verifies, confirms and maintains a cryptocurrency’s network in return of incentives is to be treated as a “supply of service,” and be subject to tax in accordance with the GST laws.
Moreover, miners which earn more than 20 lakh yearly through their mining rigs have to register themselves as a business entity with the G.S.T Council.
Today or tomorrow Indian government has to regulate cryptocurrencies in India as it will benefit both users and government hand in hand in terms of monetary gains. Indian cryptocurrency exchanges reported a turnover of Rs.200 crore in 2018 itself leading to Rs.36 crore in potential tax gains for the government.
The authenticity of the news is not confirmed as of now. If it is true, July 1 will be celebrated as “Diwali” for Indian crypto users every year.
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