The Indian government’s stance on cryptocurrencies remains ambivalent. Now, a new tax bill is looming that could put an end to many crypto exchanges.
The Indian government is considering a bill that would impose an 18 percent tax on Bitcoin Pro review transactions, according to a Times Of India media report. With transaction volumes equivalent to $5.5 billion annually, the Indian treasury would thus flush $1 million into its own coffers. The CEIB (Central Economic Intelligence Bureau), a section of the Ministry of Finance, submitted the proposal to the Central Board of Indirect Taxes & Customs (CBIC). The CEIB acts as a think tank for the Ministry of Finance in India. It has already conducted a study on the collection of goods and services tax (GST) on cryptocurrencies.
The report further mentions that the CEIB has asked the Indian government to recognize bitcoin as an intangible asset. This would effectively give the green light to impose a GST levy on all Bitcoin transactions in the country. The push does not really come as a surprise. For quite some time now, there have been concerns from the authorities about the lack of regulations regarding cryptocurrencies. The use of Bitcoin in illegal activities such as money laundering and betting came into focus.
Bitcoin trading allowed again in India since March
The challenges posed by unregulated crypto exchanges and their trading are all the greater after the Supreme Court of India overturned a two-year ban imposed by the Reserve Bank of India (RBI). Since then, banks and financial institutions have been allowed to trade digital currencies again. Immediately after the ban was lifted, transaction numbers skyrocketed.
The government in India had previously attracted attention with its very tough stance against cryptocurrencies. As BTC-ECHO reported back in August of this year, the government was even considering banning Bitcoin & Co. trading completely. How practicable this approach ultimately is remains questionable. After all, India is the third-largest economy in Asia with one of the highest growth rates in an international comparison. That there is a need for action in terms of regulation has, however, been noted many times.
Taxing trading as GST would mean the end for many crypto exchanges in India, as Bitcoin exchange chief Praveenkumar Vijaayakumar explains in an open letter to the RBI. As long as the RBI does not create clear rules, crypto exchanges would also not get the financial services they need from their lenders. In this regard, it should be clear that the announced 18 percent taxation will not provide the clarity that crypto exchanges so desperately want.