INDIA STATES NEW TAX FOR CRYPTOCURRENCY
As reported on Bloomberg, India government will likely attach an 18 percent Goods and Services Tax (GST) on cryptocurrency trading. Currently, the new development is under consideration by the Central Board of Indirect Taxes and Customs, and shall be brought before the GST council after they are finalized.
It was made clear that the digital assets will be tagged “intangible goods,” on par with other software systems, with the board stating that separate laws would be made to deal with the usage of cryptocurrencies for criminal activities.
Cryptocurrency mining – a process which verifies transactions, confirms transactions and maintains a cryptocurrency’s network in return of pay outs– will be treated as a “supply of service,” and be subject to the taxation policy in join with the GST laws.. Miners who earn more than Rs.20 lakh from their computing rigs shall have to officially register as a business body with the GST council.In addition, cryptocurrency wallet providers and users may also be taxed as per GST laws, as they supply and receive the digital currency.
These are the proposals as reported in Bloomberg
Purchase or sale of cryptocurrencies to be considered as supply of goods, and those facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services.
Value of a cryptocurrency may be determined based on the transaction 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.
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.
Interestingly, the proposal seeks levying GST from July 1, 2017 – the very day when the government sought ending bank relationships with crypto-exchanges. However, the date remains unconfirmed.
This is one of the reasons why Cryptocurrency market capitalization and top Cryptocurrency prices drastically went down within the week.