There have been many reports claiming that the Bitcoins might come under the purview of income tax. However, since they are yet to be legalised in India, there has been no clarity in India. A new report has now said that the government is likely to levy both income tax and goods and services tax (GST) on it.
As per a report by Business Standard citing a senior finance ministry official, gains and trading of bitcoins or cryptocurrencies may attract I-T or GST and a circular will be released soon. The official added that Bitcoins will be categorised as financial services and attract 18% GST on fee commission.
The report says that both the taxes will be imposed for the current fiscal year.
As mentioned earlier, there have been no clear guidelines for cryptocurrencies investors to declare their earnings. The government of India has listed a bill to be introduced in the Parliament during the Budget session of the 17th Lok Sabha. The bill seeks to ban private cryptocurrencies like Bitcoin, Ripple, Ether, and others in India.
The government is likely to table the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 which is aimed at creating a ‘facilitative framework’ for an official digital currency in India to be issued by the banking regulator, the Reserve Bank of India (RBI).
According to the RBI booklet on payment systems, the government is sceptical of these currencies and RBI is exploring the creation of a digital version of the Indian national currency.
“In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks. Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and, in case there is, how to operationalise it,” the booklet said while acknowledging how private digital currencies have gained popularity recently.
These private cryptocurrencies were banned earlier as well, but the Supreme Court later overturned the previous ban in 2018.