The Indian government has been cracking down on cryptocurrency-related tax evasion. While the tax authority has notified crypto exchanges and wealthy traders that they must pay taxes, no clear guidelines have been provided. Indians are confused about how cryptocurrencies are taxed and seven bitcoin exchanges are asking the regulators for clarification.
The Indian National Tax Service has recently inspected top cryptocurrency exchanges as well as sent out notices to wealthy crypto traders informing them to pay taxes. However, the government has not issued guidelines on how cryptocurrencies are taxed, leaving crypto users and exchanges confused.
The Authority for Advance Rulings (AAR) is the country’s adjudicatory body on tax matters. It consists of a retired judge of the Supreme Court and two members, one from the Indian Revenue Service and the other from the Indian Legal Service, its website describes.
The India Times reported on Friday that the country’s top seven bitcoin exchanges including Zebpay, Unocoin, Coinsecure, and Btcxindia are planning to ask the AAR for clarification. “At least one bitcoin exchange has already filed an application with the Maharashtra AAR for future tax liability,” the publication quoted sources with direct knowledge of the matter
Meanwhile, the country’s “indirect tax department is already looking at ways in which bitcoins can be brought under GST,” the publication detailed. Furthermore, the sales tax department and VAT authorities have also launched their own investigation on the taxability of bitcoin.
For the exchanges, the rate could depend on what the authorities deem bitcoins to be — goods, services or currency,” the news outlet elaborated. “If bitcoin is held to be a currency, there will be no GST. If it’s a good, then a tax of 18% could be levied, and 12% if deemed to be a service.”
What kind of taxes do you think the Indian government will impose? Let us know in the comments section below.