Cryptocurrency trades may be taxed in India

23 May 2018

India may start imposing goods and services tax (GST) on activity associated with trading cryptocurrencies starting as early as July 1, according to the unnamed sources cited by Bloomberg this week. The Indian government may charge as much as 18% on cryptocurrency trades, which contradicts recent statement made by the Reserve Bank of India that banks in the country are prohibited to deal with cryptocurrencies and respective trading services.

The source further added that the cryptocurrency taxation proposal is currently under consideration of the Central Board of Indirect Taxes and Custom, and the draft regulation will be later put forth for consideration of the Goods and Service Tax Council.

Under the proposed regulation, the purchases and sales involving cryptocurrencies should be taxed because they are viewed as a supply of goods. The value of the transaction will be estimated in rupees or freely convertible foreign currency. The transactions, where parties are not tax residents of India, will be subject to integrated GST (IGST), taken as an import or export of goods.

Other transactions involving supply, transfer, storage and accounting of cryptocurrencies will be viewed as services along with the cryptocurrency mining activity. Cryptocurrency exchanges, in turn, will be enforced to pay GST for their fees, if the proposal is approved, and foreign digital asset exchanges will be subject to IGST.

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