Bitcoin tax: Indian bill calls for 18 per cent
The Indian government’s position on cryptocurrencies remains ambivalent. Now, a new tax bill is looming that could put many crypto exchanges out of business.
The Indian government is considering a bill that would impose an 18 per cent tax on bitcoin transactions, according to a media report by The Times Of India. With a transaction volume of the equivalent of 5.5 billion US dollars annually, the Indian treasury would thus flush one million US dollars into Bitcoin Freedom its own coffers. The CEIB (Central Economic Intelligence Bureau), a section of the Ministry of Finance, has submitted the proposal to the Central Board of Indirect Taxes & Customs (CBIC). The CEIB acts as a think tank of the Finance Ministry in India. It has already conducted a study on levying Goods and Services Tax (GST) on cryptocurrencies.
The report further mentions that the CEIB has asked the Indian government to recognise Bitcoin as an intangible asset. This would effectively give the green light to impose a GST levy on all Bitcoin transactions in the country. The move does not really come as a surprise. For some time now, there have been concerns from the authorities about the lack of regulations regarding cryptocurrencies. The use of Bitcoin in illegal activities such as money laundering and betting came into focus.
Bitcoin trading allowed again in India since March
The challenges posed by unregulated crypto exchanges and their trading are all the greater after the Supreme Court of India overturned a two-year ban imposed by the Reserve Bank of India (RBI). Since then, banks and financial institutions have been allowed to trade in digital currencies again. Immediately after the ban was lifted, transaction numbers skyrocketed.
The government in India had previously attracted attention with its very tough stance against cryptocurrencies. As BTC-ECHO reported in August of this year, the government was even considering a complete ban on Bitcoin & Co. trading. How practicable this approach ultimately is remains questionable. After all, India is the third largest economy in Asia with one of the highest growth rates in international comparison. That there is a need for action in terms of regulation has, however, been noted many times.
Taxing trading as GST would mean the end for many crypto exchanges in India, as bitcoin exchange boss Praveenkumar Vijaayakumar explains in an open letter to the RBI. As long as the RBI does not create clear rules, the crypto exchanges will not be offered the financial services they need by their lenders. It should be clear that the announced 18 per cent taxation will not bring the clarity that crypto exchanges so desperately want.