India may slap an 18 percent Goods and Services Tax on cryptocurrency trades, and Bitcoin and its peers could be treated as intangible goods similar to software, the business news outlet BloombergQuint reported, citing people familiar with the matter.
The proposal comes even as there is uncertainty regarding the legal status of cryptocurrency in the country.
This month, India’s Economic Affairs Secretary Subhash Garg said that a meeting of the three-member high-level committee on cryptocurrencies and their regulation, constituted in December, will be convened and it will submit a review to the government soon.
Since the euphoria surrounding cryptocurrencies began rising in the fourth quarter of last year, the government issued repeated warnings regarding the risks involved in dealing with them.
While the central bank in April banned banks from dealing in cryptocurrencies, Bitcoin and its peers have not been officially declared illegal.
Some crypto firms challenged the Reserve Bank of India’s ban in courts. The RBI asked banks to end their existing dealings in cryptocurrencies by the end of June.
In May, the Supreme Court of India refused to stay the RBI ban. Next hearing of the case is scheduled for July 20.
The proposal, under the consideration of the Central Board of Indirect Taxes and Customs, will be tabled before the GST Council after it is finalized, the report said.
Other laws will deal with the use of cryptocurrencies in illegal activities. Tax authorities already made efforts to recover dues from cryptocurrency traders.
Indian government agencies are reportedly divided regarding the treatment of cryptocurrencies. While the Economic Affairs department is interested in regulation them, investigative agencies are seeking a ban, the BloombergQuint report said.
The Indian government is also reportedly considering taxing cryptocurrency trading retrospectively, from July 1, 2017, when the new GST regime came into force.
Cryptocurrency mining may also be treated a supply of service as the process generates rewards and involves transaction fees, the report said. Individuals undertaking mining on a large scale may have to register under GST.
by Jyotsna V