The Indian government through the Central Economic Intelligence Bureau (CEIB), an arm of the finance ministry has submitted a proposal to the Central Board of Indirect Taxes & Customs (CBIC), to impose 18% goods and service tax on bitcoin transactions.
The tax, if imposed is estimated to raise Rs 7,200 crore (about $1 billion) in tax revenue from bitcoin alone out of the total Rs 40,000 crore (about $5.5 billion) in bitcoin transaction annually.
According to a report by Times of India, CEIB has suggested that bitcoins be classified under intangible assets class and taxed with GST levy on every transaction.
The current price of bitcoin is $26,870.53, dropping by -1.20% in the last 24 hours. Bitcoin’s current market cap of $499.35B and market volume of $40.27B. In the last 24 hours, bitcoin has dropped to $25,875.05 and experienced a 24 hours high of $27,447.55. Currently, 18,584,368.75 bitcoins are in circulation.
Stats and Image from Coin Desk
The CEIB has conducted research on how goods and service tax will be imposed on cryptocurrency in India.
“The CEIB acts as a think tank of the ministry and has conducted a study on levying of GST on cryptocurrencies,” the report said.
This step could be towards regulating cryptocurrency in India to prevent money laundering.
CEO of Mumbai-based crypto exchange CoinDCX said in a WhatsApp chat with Coin Desk that taxing crypto industry is a good sign for the budding industry. “Government mulling a tax structure is a sign of better understanding of this novel asset class and we are hopeful that this would lead to more positive news going forward,” he said.