India wants to levy 18% tax on Bitcoin (BTC) transactions
India wants to levy a VAT tax of 18% on bitcoin transactions on stock exchanges. The government wants to collect 1 billion dollars in extra tax revenue.
Tax on bitcoin trade
It is a proposal of the Central Economic Intelligence Bureau (CEIB), an important advisory body of the Ministry of Finance. So it has not yet been finalised in law.
It specifically concerns Goods and Services Tax (GST), the Indian version of VAT.
The Times of India estimates that the annual volume of bitcoin up transactions is about 5.5 billion dollars. This new tax rule on bitcoin transactions should generate $1 billion for the Treasury.
As it looks now, these are transactions on stock exchanges. As far as is known, private transactions are still tax free.
In order to be able to levy the tax, India still has to change a lot of regulations. For example, bitcoin must be classified as intangible assets. The definition is: fixed assets that are not tangible. Think of goodwill or a patent. It is known that the country does not see bitcoin as a means of payment.
According to expert Tanvi Ratna, a new tax does not immediately mean that bitcoin is legalized in the country.
India is still struggling to regulate bitcoin and other cryptocurrencies. The approach, like other countries, is to regulate trade through anti-money laundering rules.
Formally, there is not yet a ban on buying, owning or minus digital currency. However, bitcoin is prohibited as a means of payment.
The bitcoin trade is popular in the country with 1.35 billion inhabitants. Trading volumes, especially on peer-to-peer exchanges, shot up this year. The reason for this is that the Supreme Court ruled in March that banks are no longer allowed to refuse transactions to Bitcoin exchanges.
Meanwhile, venture capitalists know where to find the bitcoin industry in the country. Recently, CoinDCX managed to attract $13.9 million in fresh daring money. Previously, BitMEX, among others, invested several million dollars in this fast growing stock market.
The American exchange Kraken is also active in the country, as is Binance.