While the Indian government is moving towards a digital currency ban, it does not want to miss out on the taxes from crypto earnings and is likely to issue a circular imposing two taxes for cryptocurrency trades.
According to multiple local media reports, a senior finance ministry official revealed that the government wants to implement an 18 percent Goods and Services Tax (GST) on the fees collected by the exchanges on crypto trades and also a personal income tax from the traders’ gains.
“Bitcoins will be categorized as financial services attracting 18% GST on fee commission collected under this segment. Plus, [personal] tax to be paid on the earnings from this,” the official said.
Though there is no official announcement on this yet, the government is expected to soon release the official circular.
Nothing to Be Optimistic About
The decision of imposing 18 percent GST falls in line with a previous report that indicated the Indian tax department’s plan to tax crypto. Though many in the local industry became optimistic about a proper definition of crypto for tax purposes, the future of crypto might not be so bright in the country.
Crypto Innovation Follows on the Heels of Recent Surge, Here’s What’s Going OnGo to article >>
“Let it be clear that just because income tax or GST has been charged on the transaction, it does not by itself make the transaction legitimate. Taxability and legality of transactions are independent of each other,” another anonymous official told a local publication.
The urgency of the taxation might have been propelled by the soon-to-be-closed financial year, which runs from April to March.
However, it is still not clear how the tax department will define cryptocurrencies for their cuts from personal income. Depending upon the category, the income from crypto can be taxed up to 30 percent.
Meanwhile, the massive Indian crypto community is continuously lobbying against the government’s plan to ban cryptocurrencies in its jurisdictions with the law.