Indian Government May Retroactively Tax Crypto
The cryptocurrency regulations, or lack thereof, in India may be confusing, but the newest reports from the country are only adding fuel to the fire. The government is reportedly considering levying a type of consumption tax on cryptocurrency trading and even mining. However, this may also become a retroactive measure, demanding payments for past actions.
The Indian Central Board of Indirect Taxes and Customs is working on a proposal to impose an 18% tax on cryptocurrencies, Bloomberg reported, citing sources familiar with the matter. The proposal will be considered by the Goods and Services Tax (GST) Council once it is finalized. Cryptocurrencies could be classified as intangible goods on a par with software, these sources said, adding that its use in illegal activities would have to be dealt with under other laws.
According to the proposal, 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. Also, it states that value of a cryptocurrency may be determined based on the transaction value in rupees or the equivalent of any freely convertible foreign currency.
The proposal further adds that transactions beyond Indian borders would be considered as import or export of goods, liable for Integrated Goods and Services Tax. Mining will be classified as a supply of service and Indian miners will have to pay taxes on any fees and rewards they make. The government can consider levying GST on crypto-trading retrospectively from July 1, 2017 - the day the new indirect tax regime was implemented.