According to news, the central government is currently weighing a plan to impose a tax on Bitcoin on Goods and Services (GST), which is expected to amount to 40,000 crores ($5.45 billion) per year.
The proposal was put forwards by the Central Economic Intelligence Bureau (CEIB), an arm of the finance ministry, which is said to have been researching possible cryptocurrency taxation in India.
The Goods and Services (GST) tax will treat Bitcoin as a ‘intangible asset’ and a GST levy could be levied on all transactions.
The CEIB has also reportedly proposed to treat cryptocurrency as a ‘current asset’ that would allow GST to be paid at the margins of its trading.
This is a huge sum, if levied, on any bitcoin exchange, as India currently ranks second in Asia, since it is the country that trades the most bitcoin.
According to data from Paxful, India traded Bitcoins worth a total of $74,915,214 in 2020 alone, a rise of 347 per cent from 2019.
This dramatic rise in cryptocurrency trading came after the Supreme Court lifted the two-year ban imposed by the Reserve Bank of India (RBI) on cryptocurrency trading by banks and financial institutions.
Currently, there is no cryptocurrency regulator in the country and crypto exchanges in the country have continued to function without the burden of regulatory enforcement for the time being.
However, it is unclear how the possible introduction of such a cryptocurrency tax might have an effect on the cryptocurrency trading climate in India.
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