India Considers Retroactive Tax On Cryptocurrency Tradesbr>
The government of India is reportedly considering imposing an 18 percent goods and services tax (GST) on cryptocurrency transactions.
According to Bloomberg, citing a source with direct knowledge of the matter, the Central Board of Indirect Taxes and Customs (CBIC) of India is working on a proposal to apply the GST to cryptocurrency trading as they could be classed as intangible goods. The CBIC will present a finalized version of the proposal to the GST Council, which is chaired by the country’s finance minister.
The proposal outlines that 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 value of a cryptocurrency transaction would be based on the value in rupees or the equivalent of any freely convertible foreign currency.
“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,” the proposal said. “For transfer and sale, the location of the registered person will be the place of supply. However, for sale to non-registered persons, location of the supplier would be considered as the place of supply. 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 source said crypto mining will be considered a supply of service as it generates new digital currency units and involves rewards and fees. Miners will be required to register with the government if the rewards they reap exceed Rs 20 lakh ($30,000 USD). Additionally, crypto exchanges and wallet providers will also have to register under the GST.
While no decision has been made yet, the source said the government may consider levying GST on crypto-trading retrospectively from July 1, 2017, the day India’s tax regime came into effect.