While India continues to show uncertainty in its approach to cryptocurrencies, local authorities are considering imposing an 18 percent tax on goods and services on BTC transactions. Since Bitcoin transactions exceed $ 5 billion a year, the new tax could generate additional income of around $ 1 billion.
18% India Bitcoin Transaction Tax?
According to report Times of India, the Central Bureau of Economic Intelligence (CEIB) forwarded the application to the Central Board for Indirect Taxes and Customs (CBIC).
CEIB recently published a report exploring the various uses of cryptocurrencies. The agency stated in it that Bitcoin belongs to the “intangible assets” category. This means that a nation can impose a goods and services tax on all transactions made in the oldest cryptocurrency. According to the agency, the new tax may also limit the use of cryptocurrencies in illegal activities.
The CEIB report estimated that the Bitcoin transaction volume is around 40,000 crore per year (around $ 5.5 billion). If the second most populous country in the world actually introduces the new tax, the government could receive up to Rs 7,200 crore ($ 1 billion) per year.
It is worth noting that this is the second proposal to introduce a new tax law. In early December, the Indian tax office considered introducing as much as a 30% tax on the profits from investments in digital assets.
Cryptocurrencies in India
This gigantic Asian country has a long history of regulating cryptocurrencies. In 2018, the Indian Reserve Bank of India (RBI) banned any financial institutions that collaborate with this bank from doing crypto activities.
Even though this was not a direct ban on cryptocurrency, most companies have abandoned cryptocurrency services. However, India’s Supreme Court overturned the RBI’s decision earlier this year and described it as “unconstitutional.”
Soon after, India began to show great interest in digital assets. Indian stocks volumes have soared and new companies have started to appear on the market.
Nevertheless, the RBI said it will challenge the Supreme Court ruling as it believes criminals are using cryptocurrency to carry out illegal transactions.