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:
- Let's Watch This Fun Video From International Steem Meetup #1—Malaysia
- Why You Should Vote For @firepower As Witness—Witness Campaign Post From India!
- Steem.Chat Contest #27
Follow Me: 