Be ready to pay tax on bitcoin in India! isn’t sound weird?
The Indian Government is leaving no stone unturned to make crypto-trading an almost impossible and herculean task within the country borders! But in trying to do so, it has opened up the door to too many unanswered questions!
According to the latest news, GOI is very likely to levy taxes on Bitcoin. Both income tax (I.T.) and goods & services tax (G.S.T) would be imposed on trading and gains of bitcoin and other cryptocurrencies. This information has been revealed by a senior finance ministry official who is privy to the developments of the same.
He mentioned that bitcoins will soon be categorized as financial services which will, in turn, will attract the standard 18% GST on fee commission that is collected from this particular segment along with personal I.T. tax which is to be paid on earnings from cryptocurrencies.
Now, while this newly surfaced information hints at the fact that the Indian Government is somewhat trying to bring cryptocurrencies under a regulatory framework, it doesn’t sync up with their previously announced plan.
On January 29th, the Centre floated a bill, titled Cryptocurrency and Regulation of Official Digital Currency Bill, in the Parliament. It aims to ban all cryptocurrencies and instead facilitate the creation of a new digital currency backed by the Reserve Bank of India aka RBI.
Prior to the announcement of this bill, in March 2020, the Supreme Court, on the grounds of violating the freedom of business and profession under Article 19(1)(g) of the Constitution, lifted the ban Reserve Bank of India imposed on banks against processing transactions related to cryptocurrency in 2018.
Since then, cryptocurrency has been operating in a legal vacuum in India until now when the GOI has once again turned its attention towards this space in light of the surge in crypto-trading.
In the last few months cryptocurrencies, especially bitcoins, have seen an overwhelming rise which prompted more Indian investors to purchase the asset. After Elon Musk, CEO of Tesla Inc and SpaceX founder added #bitcoin to his Twitter bio, in a matter of seconds it led to a 15% rise in bitcoin’s value almost immediately. This spike is further fueled by Tesla’s decision to buy bitcoins worth a whopping $1.5 billion.
Tax Implications & Crypto Bill: A Confusing Two-Pronged Attack
All in all, as for the question- where does India stand on the issue of cryptocurrencies? It still remains unanswered.
Maybe the GOI wants to impose I.T and GST taxes on bitcoin and other similar currencies as a temporary measure until the crypto bill banning the trade of the same is put into action.
Doing so will ensure newbie traders wanting to get into crypto-trade are scared off easy which in turn will make way for the proposed crypto bill to be eased into implementation. But, then again, there are no concrete answers available at this moment.
Currently, several Indian crypto trading companies, based on the assumption that bitcoin and Ethereum aren’t theoretically private but public cryptocurrencies, are also speculating if they will be banned at all. Thus, one can rightly refer to this situation as a messy pickle. We will keep you updated on all future developments.