India is in plan to ensure the nation’s cryptocurrency space is taxed until the bill to be passed on cryptocurrency assets.
Indian government is likely to introduce personal income tax (IT) and GST on the gains from trading cryptocurrencies and from platform fees according to a report from Business Standard, one of the largest English-language newspapers in India.
“Bitcoin will be categorized as financial services attracting 18% GST on fee commission collected [by exchanges] under this segment. Plus, [income tax] to be paid on the earnings from this,” a senior finance ministry familiar with this matter said. They added that an official circular will be released soon.
As per the sources of the newspaper, authorities are aiming to collect both of these taxes for the fiscal year April 2020 to March 2021.
The news is the first clarification on how the cryptocurrency industry and people associated with it, will be taxed.
The government is planning to bring a cryptocurrency bill in the ongoing session of Parliament right now, seeking a ban on “private cryptocurrencies,” as well as the formal start to develop the digital rupee to be issued by the reserved bank. Although the bill’s contents are still unknown, and the government is yet to define the term “private cryptocurrencies.”
Anurag Thakur, India’s Minister of State for Finance, has said that the impending bill will fill all the gaps in policy.
While the government has not specifically declared how crypto gains should be taxed, Nischal Shetty, CEO of Binance-owned WazirX Exchange, said crypto earnings are taxable like any other income and should be declared in the income tax returns. Shetty added that his exchange already has been voluntarily paying GST on trading fees that are collected from the customers.
Applying taxation does not really mean its legal tender, according to another source. “Let it be clear that just because income tax or GST has been charged on the transaction, it does not by itself make the transaction legitimate. Taxability and legality of transactions are independent of each other,” a senior official at the Finance Ministry said to The Hindu BusinessLine.