- The relationship between Bitcoin and India has been quite complex for years. After a long period of cryptocurrency companies preventing them from doing business with banks, India is now in the process of imposing a massive Goods and Services Tax (GST) on all BTC transactions.
The relationship between Bitcoin and India has been quite complex for years. After a long period of cryptocurrency companies preventing them from doing business with banks, India is now in the process of imposing a massive Goods and Services Tax (GST) on all BTC transactions.
An 18 percent tax can be levied on all Bitcoin transactions
It is stated that the tax will be around 18 percent and the value of a transaction to be taxed must exceed 40,000 kr. The news comes from the Central Economic Intelligence Bureau (CEIB), part of the country’s finance ministry. The firm submitted the idea to the Central Board of Indirect Taxes and Customs (CBIC), claiming that it could provide the Indian government with an additional 7,200 per year in tax-related income alone.
India has never had a positive outlook on Bitcoin. In early 2018, the country introduced a ban that blocked all BTC and crypto businesses from working with standard banks. For this reason, the sector has been blocked from standard financing and traditional money services.
India never fell off the agenda with crypto money bans
The ban remained in effect for roughly two years, but eventually the country’s Supreme Court found such activities unconstitutional. The ban was later lifted, and it looked like India was on its way to becoming a truly solid Bitcoin and cryptocurrency hub. But this now seems to be a bad prospect, not only because of the new tax, but also because India is implying it. Now the country wants to ban all crypto trading on a general scale.
This idea has been widely criticized, as many analysts believe that with Bitcoin and Blockchain becoming mainstream forms of finance, the country will initially lag behind its neighbors and lose competitiveness in the modern trading world.
What does the new tax move mean?
But the new tax move could be a direct response to this criticism. It can be argued that India is listening to analysts and taking notes, although it is currently purely speculative. For this reason, they may not want to ban crypto entirely as originally announced. Instead, chances are they think they can make some money from the growing crypto base.
CEIB said it wanted to classify Bitcoin and other types of crypto as “intangible assets” that would allow taxation. One of the biggest problems India is facing right now is that the cryptocurrency industry is an unregulated paradise. Thus, regardless of what traders think, they have the right and freedom to look through any lens the government wants and to take the steps it deems necessary.
Perhaps the newly discovered tax assessment of BTC transactions can give regulators the support they need to take steps and enforce the right rules so Bitcoin trading doesn’t have to be that expensive.