Plans are afoot in India to apply goods and services tax to cryptocurrency transactions, anonymous sources have said.
India is working on proposals to make cryptocurrency transactions subject to goods and services tax (GST), sources told Bloomberg May 23.
According to the anonymous parties with “direct knowledge” of the plans, the government’s Central Board of Indirect Taxes is considering applying the 18 percent tax to exchange operations, which it would view as “intangible goods.”
“Purchase or sale of cryptocurrencies should be considered as supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services,” the publication reports in a summary.
India has so far refrained from issuing regulations on cryptocurrency, despite efforts by its central bank to reduce the ability of businesses and citizens to interact with them.
In April, the Reserve Bank of India formally forbade domestic institutions from servicing cryptocurrency businesses in a move which has so far failed to curb the proliferation of new exchanges.
If the taxation rule goes ahead, it would signal a move towards legitimacy of the industry in the continued absence of hard-and-fast legislation.
“If buyers and sellers are in India, the transaction would be treated as a supply of software and the buyer’s location will be the place of supply,” Bloomberg continues, noting elsewhere that:
“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.”
The move is not the first targeting taxation of cryptocurrency in India. In February, letters were sent to around half a million traders demanding they report profits on exchange activities.
