Reportedly a few days ago, India is considering introducing new taxes for the crypto space, in order to replenish the state pockets with new revenue, taking advantage of this new flow of money.
Here is what was published in the Business Standard newspaper
At this point, the government is increasingly likely to impose Personal Income Tax (IT) and Goods and Services Tax (GST), respectively, on earnings from trading cryptocurrencies and platform fees, according to a report. published on Wednesday by Business Standard, one of the largest English-language newspapers in India.
“Bitcoin will be classified as a financial service, attracting 18% of GST on commissions collected [by exchanges] in this segment. Also, [income tax] has to be paid on earnings, ”said a senior official who works at the Indian Ministry of Finance and who is somewhat familiar with the matter. Furthermore, it was added that an official circular will be released very soon. According to sources in the same newspaper, the authorities aim to collect both taxes for the fiscal year, starting from April 2020 until March 2021.
If confirmed, the news represents the first point of clarification on how the cryptocurrency sector and its users will be taxed, albeit probably in the short term.
Will earnings from cryptocurrencies be taxed soon?
The government is also considering introducing a cryptocurrency bill, in the ongoing session of Parliament, calling for a ban on "private cryptocurrencies", as well as the formal start of the development of a digital rupee to be issued by the central bank. The content of the bill is still unknown and the government has yet to define the term "private cryptocurrencies". Anurag Thakur, India's finance minister, said the upcoming bill would fill some of the most obvious policy gaps.
While the government has not specifically stated how to tax cryptocurrency earnings, Nischal Shetty, CEO of WazirX (owned by Binance), said cryptocurrency earnings are taxable like any other income and should be included in tax returns. Shetty added that her exchange voluntarily paid GST on trading fees collected from clients.
According to another source, taxation does not necessarily imply legality. “Let it be clear that just because income tax or GST was charged on the transaction, it does not make the transaction legitimate in itself. The taxability and legality of transactions are independent of each other, ”another senior finance ministry official told The Hindu BusinessLine recently.
In the report published a few days ago, the anonymous official also said that cryptocurrencies, although unregulated, have not yet been banned and tax rules apply to all types of services and goods. And how do you do yours investments? Let us know in the comments below!