In what could be considered as a discouraging move for bitcoin users in India, a report in The Hindu points that the Indian government is contemplating introducing a regulatory regime for virtual currencies that would enable them to levy Goods and Services Tax (GST) on their sale.
For the uninitiated, from July 1, 2017, all the major taxes in India like excise duty, service tax, special additional duty and VAT have been subsumed into a single tax called GST.
A while ago, we reported how Indian government officials have been meeting for months to develop a legal framework for cryptocurrencies, and had even formed a special task force in April to investigate the issue and come up with the possible options that can help cut fraudulent transactions involving Bitcoin and other such digital currencies.
The committee comprises of officials from India’s Central Bank RBI, finance ministry, NITI Aayog, ministry of information technology and the State Bank of India. They are currently in the midst of finalising a report that would decide the future of cryptocurrencies in the Indian subcontinent and whether there’s a need to regulate or legalise them.
India is considered as an important country for Bitcoin’s growth and future. The demonetisation drive sprung upon the nation late last year helped boost bitcoin usage like never before. With ATMs and banks running dry, people of the second largest population on the planet turned to digital currencies and mobile wallets to quench their cash thirst.
According to the latest development, at one point of time, the committee’s working was interpreted when a suggestion was made regarding pursuing a blanket ban on all virtual currencies. But, eventually the proposal was dropped.
The new regime being pursued by the committee has a possibility of bringing the trading of cryptocurrencies under the oversight of the stock market regulator, Securities and Exchange Board of India (SEBI).
The government’s idea behind the whole situation is to treat virtual currencies similar to what the rules and regulations are in place for gold being sold digitally. This will allow Bitcoin to be traded on registered exchanges and promote a formal tax base, while also keeping a close watch on their usage for illegal activities such as money laundering, drug trafficking and terror funding etc.