Cryptocurrency is on the go, and its trading has gained much popularity across the world and in India too. Hence, some under-the-table reports suggest that Indian tax authority is reportedly seeking out plans to impose Goods and Services Tax (GST) on cryptocurrency trading, even while the legal status of such virtual trading is unclear.
Looking into the popularity of cryptocurrency trading, even in India, the government might be mulling to gain benefit from virtual currency by imposing GST on cryptocurrency trading. As per Bloomberg, an anonymous person with direct knowledge of the situation mentioned that India’s Central Board of Indirect Taxes and Customs had proposed a GST on cryptocurrencies. The anonymous source said that the proposal is currently being considered by Central Board of Indirect Taxes and Customs, will be tabled before the GST Council after it’s finalised.
Interestingly, crypto-transactions will be treated as supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services. In the proposal, it has been mentioned that any purchase or sale of cryptocurrencies are subject to GST and the value of a cryptocurrency transaction will be based on its value in Indian Rupees or a readily convertible foreign currency. Also, the crypto-transactions that are conducted with parties outside of India are liable for integrated GST (IGST) and therefore seen as a good that has been imported or exported. The magic GST number is supposedly 18%, because the luxury that cryptocurrencies are – which might be implemented from July 1, 2019.
The good thing about implementation of GST on cryptocurrencies is that it should clear off the status of such digital assets and how they will be taxed, though its use in illegal activities would have to be dealt with under other laws. Imposing GST will also help in regulating trade in cryptocurrency while tapping into a previously untaxed source to generate income for the nation. However, taxing cryptocurrencies will be difficult for India as the government has difficulty classifying cryptocurrencies. Because the Centre has neither banned nor legalized cryptocurrencies – these virtual assets can be intangible goods like software – but illegal activities related to its trading needs intervention of other laws. Nothing is confirm yet, we will know when time arrives.