The Government of India is moving towards imposing a potential tax of 18% on Bitcoin trading in the country.
According to reports, the central government is currently considering a proposal to impose a Goods and Services (GST) tax on Bitcoin.
The proposal was put forward by the Central Economic Intelligence Bureau (CEIB), an arm of the finance ministry, which is reported to be investigating possible taxation of cryptocurrency in India.
Goods and Services (GST) tax will treat Bitcoin as an ‘intangible asset’ and a GST tax may be applied to all transactions.
Reportedly, CEIB has also proposed to treat the cryptocurrency as an ‘current asset’ that will enable GST to be enforced over margins in its trade.
Leading country in Asia
This is a significant amount in every Bitcoin trade, as India currently ranks second as the top Bitcoin trading country in Asia.
According to data from Paxful, India traded Bitcoin worth $ 74,915,214 in 2020 alone, a 347% increase over 2019.
This sharp increase in cryptocurrency trading came after the Supreme Court lifted a two-year ban on cryptocurrency trading by banks and financial institutions by the Central Bank of India (RBI).
Currently, there is no legal regulation for cryptocurrency in the country, and crypto exchanges in the country have continued to operate without the burden of legal compliance for now.
However, it remains unclear how the imposition of such a tax on cryptocurrency could affect the crypto trading environment in India.