Bitcoin transactions in India may soon come under the perview of Goods and Services Tax (GST). As per estimates Bitcoin transactions in the country is estimated to be around Rs 40,000 crore per annum.
As per a report in the Times of India, government is weighing a proposal to impose 18% GST on bitcoin transactions. As per the daily, the Central Economic Intelligence Bureau (CEIB), a finance ministry arm, has put forward the proposal to the Central Board of Indirect Taxes & Customs (CBIC), suggesting that the government could potentially receive Rs 7,200 crore revenue annually by imposing 18% GST on bitcoins trading in the country.
The CEIB acts as a think tank of the ministry and has conducted a study on levying of GST on cryptocurrencies. The publication citing finance ministry sources mentioned that CEIB has suggested that bitcoins can be categorised under ‘intangible assets’ class and a GST levy could be imposed on all transactions. The board has suggested that the cryptocurrency can be treated as current assets and GST charged on the margins made in its trading.
As cryptocurrency exchanges are unregulated in India it posed a challenge before the government, particularly after the Supreme Court lifted a two-year ban imposed by the RBI on banks and financial institutions to deal with digital currencies. At present, there is no regulator for cryptocurrency and hence there is also fear of it being used for big-time money laundering and undermining of legitimate currencies.