Cryptocurrencies have become very much popular in India and there are many talks that these digital coins will soon be banned by the Government of India. A Crypto Bill is expected to be announced anytime from the government and there are talks that there will be a twin tax introduced by the government. Let’s look at whether the cryptocurrencies will be taxed by the Govt. of India or not.
Tax on Cryptocurrency
There are reports that India is planning to impose a tax to boost the short-term investors in the space of cryptocurrency before bringing a ban on these asset classes.
According to reports from business standards one of the largest English-language newspaper in India, the government is planning to impose personal Income Tax (IT) and a Goods and Service Tax (GST) on the gains received by the traders and investors who are involved in the trading of cryptocurrencies and also from the gains received as platform fees.
GST on Bitcoin
A senior finance ministry official who is familiar with the subject matter conveyed that bitcoin will be categorized under the financial services which will attract a commission fee of 18% GST by exchanges under this segment.
The investors will also have to pay Income Tax on the earning earned from the cryptocurrencies. The senior official has informed an official circular which will be released soon. According to the sources from the newspaper, the authorities are aiming towards charging taxes for both the fiscal years that are April 2020 to March 2021.
The government is also planning to introduce a cryptocurrency bill in the parliament for the ongoing session. The bill will focus on seeking a ban on the private currencies and a formal start for the development of a central digital currency which will be issued by the central bank of the country.
The actual contents of the bill are not yet known and the Government hasn’t mentioned the term private currencies. The bill is expected to fill the gaps regarding the policies according to Anurag Thakur who is the minister of state for finance.
Taxation and legality
The Government has not mentioned how the gains from cryptocurrencies are supposed to be taxed but the CEO of WazirX Nischal Shetty said that the earnings of cryptocurrencies are supposed to be taxed like any other source of income and should come under the Income Tax slab.
He added that his cryptocurrency platform has been voluntarily paying the GST on the collection of the trading fees. According to another source which says taxation cannot be confirmed that the digital coins would be made legal in the country. He added that taxability and the legality of the coins are independent of each other and not dependent.
An anonymous official had said that while cryptocurrencies are unregulated, they have not yet been banned and the rules for taxation apply for all the services and commodities.
Is Cryptocurrency legal in India?
Cryptocurrencies are not illegal in India anybody can buy, sell and trade cryptocurrencies.
Will India ban Cryptocurrency again?
According to the rumoured Cryptocurrency and Regulation of Official Digital Currency Bill, the Indian government might ban private cryptocurrencies in India.
Will Cryptocurrency be taxed in India?
According to the reports Cryptocurrency might be be taxed in India soon.
If the news about the ban of cryptocurrency and the bill regarding the cryptocurrency gets confirmed it will be a clarification on how the cryptocurrency industry will work and how the cryptocurrency users will be taxed.
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