Is India Legalizing Cryptocurrency Trading? India’s income tax department has proposed to levy 18% tax on cryptocurrencies. This news is a glimmer of hope for the traders and carries positive prospects. An anonymous person reported this news on Bloomberg. The proposal will reach to GST council after the finalization.
How will they make crypto assets taxable?
The plan is to declare crypto assets as intangible goods to make them fall under the tax laws for software. However, the proposal also mentions the need for devising a separate law to deal with criminal activities. The new law will be treating digital assets as ‘Supply of Goods’ and ‘Supply of services’.
As per the proposal, ‘Transactions beyond the Indian territory will be liable for integrated GST, and would be considered as import or export of goods. IGST will be levied on cross-border supplies.’
Is India Legalizing Cryptocurrency Trading?
Major Points of the proposal
The sources has revealed the important points of the proposal with a request of anonymity. The crypto market is huge in India as it is the country with a second largest population.
- Crypto trading will fall under either Supply of Goods section or Supply of services section based on the nature of transaction.
- The sale and purchase of cryptocurrencies will fall under supply of goods section.
- The services provided by miners and exchanges will fall under a section of supply of services.
- In case the buyer and seller are from India, the transaction will be treated as a software transaction. The location of buyer will be the place of supply.
- The place of supply will vary in different cases.
- Transactions outside India will be levied as per the integrated GST laws. In this case the digital currencies will be treated as import and export and the relevant tax laws will be implemented
Crypto Mining is a taxable activity according to the proposal
The proposal is comprehensively covering the tax needs of crypto industry. All activities other than trading should be treated as supply of service. This includes miners, crypto wallet providers and any other service providers. Miners who are earning more than 20 lack from their rigs should be liable to taxes. They will also have to register their firms with GST council.
Please also read this: Facebook may launch its own cryptocurrency
Why this is a breaking news for the Indian Crypto Traders
The news that “Is India Legalizing Cryptocurrency Trading?” has raised many eyebrows. Earlier this year, crypto traders were undergoing a swere treatment from the government and the central bank of India. The Bank has bared all the banks to do transactions with exchanges and traders. Following these restrict orders, Indian exchanges started thinking of moving to another country to run the services as off-shore. The next day, Pakistan state bank has also ordered the banks to stop dealing with exchanges and traders dealing with crypto currencies. However, this news seems to be a ray of hope for the India traders since it might pave the way to make crypto a legal activity in the country.