Cryptocurrency investors and enthusiasts in India can now at least rejoice in the fact that cryptocurrency trading might be legalized in the country even though it might come with an 18 percent Goods and Services Tax (GST).
On April 6, the Reserve Bank of India (RBI) issued circular asking banks and financial institutions to refrain from dealing in all kinds of cryptocurrencies. A little after many cryptocurrency traders and organizations moved courts against this RBI circular, the Supreme Court of India announced that they will hear the case on July 20, 2018, and determine the fate of cryptocurrency trading in India.
Traders in cryptocurrency can now take heart in the fact that there is a glimmer of hope as far as the future of cryptocurrency is concerned.
Central Board of Indirect Taxes and Customs to Check Proposal
The proposal of levying 18 percent GST on cryptocurrency trading is being considered by the Central Board of Indirect Taxes and Customs. The details will later be presented before the GST Council.
Cryptocurrencies or digital asset will come under “intangible goods,” similar to other software systems. There will be separate laws to deal with criminal activities occurring through cryptocurrency trading.
Features of the Tax Proposal for India
According to officials, the Income Tax department realizes the importance of taxing virtual currencies. Bloomberg Quint discussed a few of the many points from the proposal:
- Buying or selling of cryptocurrencies must be considered as a supply of goods, and those who facilitate these transactions will be treated as services.
- The place of the registered person will be the place where it will be supplied for both transfer and sale. In case of sale to persons who are not registered, the location of the supplier will be the place of supply.
- Integrated GST will be taxed for transactions out of India. It will be similar to import or export of goods. There will be IGST levied on cross-border supplies.
It is strange that if all things go as per plan, the GST will be levied on July 1, 2017. The date is yet to be confirmed.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]