As uncertainty continues to loom over the fate of cryptocurrency regulation in India. A new report on Bloomberg Quint states the possibility of Indian Government levying GST (Goods and Services Tax). The proposal is underway and is being considered by Central Board of Indirect Taxes and Customs. Once it's ready they will present it to GST Council.
The latest news in interesting because the government hasn't classified cryptocurrencies as legal or illegal. However, they may be considered as intangible goods similar to software.
However, none of this is final as the committee made to research and draft regulations on cryptocurrencies are yet to come out with their verdict on the matter. Some government departments such as Department of Economic Affairs wants to regulate cryptocurrencies while other agencies would prefer a ban.
Key Points Of This GST Proposal
- Purchase or sale of cryptocurrencies should be considered as 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, 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 as import or export of goods. IGST will be levied on cross-border supplies.
It's a hypothetical scenario at the moment. However, the report also speaks of the possibility of retrospective taxation. This could be a problem for many small investors and traders if the government decides to impose 18% GST for trading activity post 1st, July, 2017.
Treating cryptocurrencies as goods and services may make taxation simpler. The government will have to just issue a circular that they were always liable to GST, Abhishek Jain, indirect tax partner at EY India, told BloombergQuint. But to tax them as a currency or a security will require a change in law, he said.
Cryptocurrency exchanges will have to register under GST and pay tax on the commission they earn, according to the proposal. For exchanges located outside India, service provided by them to Indians would be considered import of a service, and they will have to pay IGST.
It's business as usual for tax collection agencies and Income tax department. They are happy to levy taxes and IT department will ensure people pay their dues. But what about regulating the market making it easier for people to do business in these new arenas. No word on that as usual!
It's simpler to consider leaving the country and do business in a different nation with better laws around cryptocurrencies than be a sitting duck in India. Many startups and business dealing in cryptocurrencies are doing that already!
Supreme Court has set a date of 20th July for the next set of hearing on the matter. 5th July is the last date for banks to wind up their services rendered to cryptocurrency exchanges.
Overall this is not a very good news at this point. If GST is imposed at 18% we'd have to pay INR 18,000 on our crypto profits of Rs. 100,000. Income tax will be levied on top of this. It's unclear how bloggers or consultants earning encashing cryptocurrencies can go about their business should such a rule come into force.
It's easy for the government to come out with a mandate or circular and simply impose taxes respectively. Political loot is common in the country. Will this be another form of it? Who knows!
The situation will become clearer in a month or two. Until then stay tuned to my updates on the same.
If you like my work kindly resteem it to your friends. You may also continue reading my recent posts which might interest you:
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When the government doesn't like something, they try to kill it off with taxation.
It's easy: they will just stop reporting it. Once the gov. losses legitimacy, the breaking of unjust laws becomes an act of rebellion and pride. Just ask the Greeks.
18% is quite steep actually. But I am more confused with the GST levied when the currency itself isn't classified under either a legal or illegal tender.
For 1 lakh it is 18000 and for 2000 it is 18000÷1000000 into 2000 eual to 360 rupees. I think this is quiet high for a small crypto transaction, Isn't it so.?
For a transaction of 2000 if we have to pay 360 then i think it is better not to pay tax as we are likely to get small profit and have to pay high amount of tax than other services.
if we sell 2000 rs of crypto what will be the charges sir?
I mistakenly reply to your query to above comment, have a look dear.
Haha! If they are making crypto trading illegal from 6th July then why they are even thinking to impose GST on it. Government is confused af. :-D Different departments are not even in sync with each other. Still hoping that we are not doomed.
Crypto is not illegal after 6th. Crypto is neither illegal nor legal and that status hasn't changed.
Okayy @firepower. So it's like that banks cannot support exchanges after that day, that's it?
I had one other doubt in my mind. How to showcase your earnings in ITR once your start using P2P exchanges to convert BTC to INR?
Yeah that's right.
For p2p, best to check with your auditor what is the suitable course of action for you.
Awesome.
If government regularize Cryptocurrency then 18% GST will be acceptable. We will pay 18% GST so that our leaders can roam world and spend some in Smart city initiative.
Haha..really.. acha dhin for leaders is on its way!
This is actually very funny ! that somehow Government is desperate to tax crypto investors and same time denying legal status. Now question is how they will prove that cryptocurrency is actually software?
Funniest part is import tax- How do they know my wallet is in India ? ROFL
I hope it will bounce back soon
What the hell🙃🙃 is it true?
we'll know soon enough.
Most welcome @firepower
I like this India.
I love bitcoin....
Good post 👍👍👍
The problem with governments is that they are always looking to impose a tax or commission rate on anything beneficial and productive that humanity invents, I believe that only when we accept that we have to pay taxes on cryptocurrencies will governments accept them. have a nice day @firepower.
The hide and seek game still on....to be or not be..these kind of news always make people to get more interest on crypto...anyway everyone is hoping and praying to get the digital cirrency a legal tender..it is good to say the "ifs and buts of indian crypto"
I think it's good.
At least removed the ban on cryptocurrency . And it's included in GST but rate is so high .
Indian government really sucks,
It's like we Blogger are going to face some really hard days in coming future for withdrawing our funds.
Cryptocurrency in India is expanding very fast. It is very good that your articles are very beautiful and informative...Bitcoin is a boss.........
You know it's funny they want to charge taxes but not make it a legal tender and currency.
This is a good news if Government of India is mulling to levy GST on cryptocurrency transaction because if tax is levied on cryptos, then this business will have to regularize and it will automatically become a legal business.
However, it will not be an easy thing for the government to bring cryptocurrency business under the ambit of GST.
I do not really understand about crypto but I like the explanation from you
Already we have paid income tax, transaction charges and more, it is really too much.
But this can go either way but i think this move needs to be taken at any cost rather than banning it.
It is better than banning
Great policies of indian government
If GST will impose then it's legal otherwise illegal.
Now GST will define weather something is legal or illegal in our country.
Great policies of indian government
If GST will impose then it's legal otherwise illegal.
Now GST will define weather something is legal or illegal in our country.
Great policies of indian government
If GST will impose then it's legal otherwise illegal.
Now GST will define weather something is legal or illegal in our country.