India works on levying 18% GST on cryptocurrencies
Indian government has not quite yet entered the cryptocurrency market. In April 2018, the Reserve Bank of India (RBI) prohibited financial institutions from partaking in transactions related to virtual currencies. However, since this did not stop the proliferation of cryptocurrencies in the country, the government has decided to treat cryptocurrencies as intangible goods and levying 18% tax on them. In February 2018, the Income Tax Department issued almost one lakh notices to people who had invested and earned from Bitcoin, without declaring it in their income tax returns.
Since many people in India still trade in cryptocurrencies, the Government reasons that the decentralized system that the cryptocurrencies are based on may lead to illegal activities; which is why they have decided to levy taxes – in the form of GST, so as to be able to monitor them under law.
Unocoin has ensured that trading of virtual currencies is done under KYC-AML guidelines, to stop illegal activities.. Cryptocurrencies are neither banned nor legalized in the country, though the RBI has issues several warnings regarding them. Unfortunately, due to the confusion regarding their status, it is difficult to regulate them, and the law might find itself ineffective if the people begin using cash as a means of trading in virtual currency.
The tax proposal is said to mark the location of the supplier and the receiver as the locations of transfers and sales. Not only domestic, but international tax rules would also be applied should there be cross country trading of digital currencies, according to Business Today.
Hopefully, the taxes will ensure that there will soon be a legal framework designed for the transactions related to various cryptocurrencies and clear the confusion that surrounds them.