India Considering 18% GST on Cryptocurrency Trading Retroactively from July 2017

GST on Cryptocurrency

India Considering 18% GST on Cryptocurrency Trading Retroactively from July 2017

The Indian government is considering levying 18% GST on cryptocurrency trading that would put virtual currencies under intangible goods category. This proposal might get applied retroactively from July 1, 2017, when GST came into action.

Cryptocurrency might get classified as intangible goods with 18% GST

As reported by Bloomberg’s Indian division, BloombergQuint, India is considering to levy Goods and Services Tax (GST) on cryptocurrency trading. Despite having no clarity on the legal status of the cryptocurrencies, the government might introduce 18 percent GST.

Central Board of Indirect Taxes and Customs is considering this proposal which will be presented to the GST council once it gets finalized.

This would mean cryptos would fall under intangible goods while other laws would deal with their illegal use.

Also, this taxation could be considered retroactively from July 1 when GST was implemented. This would mean huge revenue to the taxation department.

No doubt, cryptocurrencies hold immense potential for the Taxation Department as well. In February, Income Tax Department issued notices to the crypto traders in order to recover the dues.

Moreover, treating cryptos as goods or services is simple to tax whereas taxing them as security or currency would require changing the law.

India has yet to take a decision on cryptocurrencies. Though the central bank of the country, RBI banned all the registered entities from providing services to the businesses dealing in cryptos in April, a lawsuit is filed in the Supreme Court against RBI’s order for which the hearing is in July.

Cryptocurrency taxation will also depend on the findings, the panel set up to suggest crypto regulations come up with.  

Also, read: Polish Finance Ministry Temporarily Suspends Irrational Crypto Tax

What does the proposal entail?

The purchase or sale of cryptos will be treated as the supply of goods while other transactions like transfer, storage etc will be taken as services. The location of the buyer will be taken as the place of supply and transaction to be treated as the supply of software, if the buyers and seller are in India.

For the value of a crypto, it will be determined on the basis of transaction value in rupees or equivalent foreign currency. The location of the registered person will be the place of supply for transfer and sale while, in a sale to non-registered persons, the location of the supplier is the place of supply.

On cross-border supplies, IGST will be levied that would be considered an import or export of goods.

When it comes to mining, due to the reason that it generates cryptos and involves transaction fees along with rewards, it will be treated as a service. In case the reward value goes above Rs 20 lakh, individual miners would have to register under GST.

The proposal further brings wallets that stores keys to be taxed under GST whose service providers will also have to register under GST as well. Moreover, crypto exchanges will have to get register under GST and pay taxes while for those located outside India, they would have to pay IGST.

As for the legal status of the cryptocurrencies, the local media source stated unnamed people close to the matter saying along the lines of: The legality of an asset has bearing on taxability, a tax is a disincentive against an activity which is not legal.

What are your views on 18% GST on crypto trading? Share your thoughts with us!

Summary
India Considering 18% GST on Cryptocurrency Trading Retroactively from July 2017
Article Name
India Considering 18% GST on Cryptocurrency Trading Retroactively from July 2017
Description
The Indian government is considering levying 18% GST on cryptocurrency trading that would put virtual currencies under intangible goods category. This proposal might get applied retroactively from July 1, 2017, when GST came into action.
Author
Publisher Name
COINGAPE
Publisher Logo
View comments

Lauren, a blockchain, and a cryptocurrency strategist has created a project of crypto price predictions for each month.