India, the country which has been outsourced plenty of IT jobs may soon accept cryptocurrency. The announcement finally came after a lot of drama between the Reserve Bank of India and cryptocurrency enthusiasts from the colorful and cultural country of India.
India is currently the world’s second-largest country by population and has many cryptocurrency investors.
Bloomberg has reported a move of levying 18% of Goods and Services Tax (GST) on cryptocurrency trading in India which would not only keep cryptocurrency traders grinning from ear to ear but also the government richer.
As of now it’s not confirmed and is being discussed by the Central Board of Indirect Taxes and Customs. If approved, it will move on to the GST council for implementation.
Since cryptocurrency is similar to digital assets, it is considered to be intangible goods which are identical to the other software systems being developed in technological inclined India.
However, a cry of concern is the crime that cryptocurrency can assist in and thus comes in the laws which might complicate it.
So far, confusion is still in the air about the Reserve Bank of India’s circular in April which asked banks to withdraw support of cryptocurrency exchanges. However, there was a three-month wait on this to be implemented, which has resulted in petitions both offline in court and online.
However, the below proposal covers significant points regarding taxing cryptocurrency-
- 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.
What’s interesting is the date of GST being levied is July 1, 2018, which is the very day cryptocurrency transactions with banks were to stop.
Even cryptocurrency miners, who earn more than 20,00,000 Indian Rupees need to register as a business and be subject to tax. It is due to being a part of cryptocurrency’s ‘supply of service.’
Even the cryptocurrency wallets which facilitate transactions will be taxed as per GST.
With cryptocurrency exchanges reported to have a turnover of Rs. 2000 million ($20 million) monthly and hence it is no wonder the government has placed it as if it was a gold digging mine. If taxed for the ten month period until April, it would make the government richer by 3600 million Indian Rupees.
However, this reduces the panic created and simplifies the whole taxation and how cryptocurrencies can exist in this vast country.
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