The Indian government could soon categorise Bitcoin as an intangible asset and start imposing an 18% goods and services tax (GST) on BTC transactions, the Times of India reported on 29 December.
According to the publication, India’s Central Economic Intelligence Bureau (CEIB) has submitted a draft document to the Central Board of Indirect Taxes & Customs that proposes levying 18% GST on margins made in BTC trading. The CEIB has estimated the volume of BTC transactions in the country is around $5.5 billion, which would suggest that India could earn up to $1 billion from taxing the largest digital asset on the market.
The CEIB has further proposed that the Indian government categorizes Bitcoin as an intangible asset in order to impose the GST levy on its transactions. If adopted, the proposal will finally add clarity on the crypto tax front in India, which could lead to an increased institutional participation in the BTC market.
The lack of crypto regulations in the country has caused authorities to raise concerns over the usage of digital assets in illegal activities, such as money laundering and betting. This was also one of the reasons behind the blanket ban on bank’s dealing with crypto businesses that was imposed by India’s central bank back in 2018. The country’s Supreme Court intervened in 2019 and lifted the ban on crypto, which has caused trading volume in the country to increase substantially.