India may levy Goods and Services Tax on cryptocurrency trading

drmilind2004

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Quote from: botany on May 26, 2018, 04:06:31 PM

GST is non-cumulative. What it essentially means is that you get credit for input GST paid. So a trader who buys and sells bitcoin would only pay GST on the profits that he makes.

Thanks for clarifying this issue!

However, wouldn't the profit being taxed under GST, and the same amount being taxed as Income/ Corporate Tax become double taxation?

That Input GST credit is a complex beast. Even the biggest companies, like Patanjali (per interview with their CEO), are suffering because they are not getting it right.

Also, this GST will dispose of any remaining chances of using Cryptocurrency for day-to-day transactions in India. It's far simpler to use a mobile wallet like PayTM, which doesn't involve any such GST calculations.

iram1011

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Quote from: ankurguta87 on May 23, 2018, 04:14:22 AM

As per the article published on bloomberg, India may levy Goods and Services Tax on cryptocurrency trading, according to people with direct knowledge of the matter, even as there’s lack of clarity about their legal status in the country.

The government may levy an 18 percent GST.

Cryptocurrencies could be classified as intangible goods on a par with software, they said, adding that its use in illegal activities would have to be dealt with under other laws.

Such a mess these guys have made of cryptocurrency in our country. I do not know whom to believe and whom not to. I remember reading an article which mentioned that only government has the power to ban the cryptos and RBI cannot do anything about it. They all are still waiting for verdict of the committee that has been set up.
I wish we all could get a clear information on this subject. The wait is giving so much anxiety.

botany

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Quote from: drmilind2004 on May 25, 2018, 10:07:34 AM

3) Now, the critical part is in the btcmanager article. It says that: "Purchase or sale of cryptocurrencies should be considered as a supply of goods".

That means the entire transaction amount is treated as goods to be taxed.

GST is non-cumulative. What it essentially means is that you get credit for input GST paid. So a trader who buys and sells bitcoin would only pay GST on the profits that he makes.

drmilind2004

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Here are two news reports regarding this GST:

https://m.businesstoday.in/story/cryptocurrencies-under-gst-bitcoin-tax-government-india-rbi-ban/1/277610.html

https://btcmanager.com/india-may-levy-18-percent-tax-on-cryptocurrency-activities-making-it-practically-legal/

The sense I get from them is:

1) Mining will be taxed. Also, mining rigs generating in excess of Rs.20 lacs (per annum?) will have to register as a unique business entity.

2) There's the GST on exchange fees, i.e., 18% on the 0.2% maker fee. This shouldn't really be a problem at all.

3) Now, the critical part is in the btcmanager article. It says that: "Purchase or sale of cryptocurrencies should be considered as a supply of goods".

That means the entire transaction amount is treated as goods to be taxed.

Luckily, these are just proposals for now. Maybe, some of the more powerful people here should think of lobbying hard; because if Cryptocurrency is defined as "intangible goods" and "software" the 18% tax becomes applicable on the entire transaction amount! Shocked

botany

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Quote from: drmilind2004 on May 24, 2018, 10:25:07 PM

Now, here comes 18% GST. This is a tax on your ENTIRE transaction of Rs.1000/-, and not just on that Rs.2/- Zebpay fee. So, you now pay Rs.180/- GST.

Do you have any confirmation on this? I am pretty sure that exchanges will charge GST on the service that they provide (or exchange fees). Charging GST on the entire transaction does not make sense.
https://www.zebpay.com/fees/
This talks about 0.2% fees on transactions and 18% GST.

drmilind2004

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Quote from: cosmo1 on May 24, 2018, 01:41:50 AM

So the government announce GST on cryptocurrency and thus people could do trading etc and this will not affect anything.

You are wrong. Here's why it matters:

Zebpay charges a 0.2% maker's fee. That is, for every crypto transaction of Rs.1000/- it charges Rs.2/-. I have come across complaints on this forum that this fee charged by Zebpay is excessive.

Now, here comes 18% GST. This is a tax on your ENTIRE transaction of Rs.1000/-, and not just on that Rs.2/- Zebpay fee. So, you now pay Rs.180/- GST.

Guess what all those complainers about Zebpay's "excessive" fee are going to do when they see this GST drain? Cheesy

cosmo1

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Quote from: ankurguta87 on May 23, 2018, 04:14:22 AM

As per the article published on bloomberg, India may levy Goods and Services Tax on cryptocurrency trading, according to people with direct knowledge of the matter, even as there’s lack of clarity about their legal status in the country.

The government may levy an 18 percent GST.

Cryptocurrencies could be classified as intangible goods on a par with software, they said, adding that its use in illegal activities would have to be dealt with under other laws.

India is making bitcoin legal nor illegal government cannot directly make bitcoin as legal it affects banks etc on other side they cannot make bitcoin as illegal.So they have to support on both sides.So the government announce GST on cryptocurrency and thus people could do trading etc and this will not affect anything.

botany

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For those who would like to read the original article, here it is

https://www.bloombergquint.com/gst/2018/05/23/india-mulls-gst-on-trading-of-virtual-currencies

I find it very funny that the government is talking about taxation after the RBI has pretty much killed off crypto trading, or at least will drive it underground.

ankurguta87

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As per the article published on bloomberg, India may levy Goods and Services Tax on cryptocurrency trading, according to people with direct knowledge of the matter, even as there’s lack of clarity about their legal status in the country.

The government may levy an 18 percent GST.

Cryptocurrencies could be classified as intangible goods on a par with software, they said, adding that its use in illegal activities would have to be dealt with under other laws.

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