India is seeking to impose an 18% tax on digital currency trading. According to local reports, the government estimates that the industry could provide up to $ 1 billion in taxes once the taxes are imposed.
The Indian government’s plan to tax the digital currency industry has been an open secret for a few months now. As CoinGeek reported in early December, a local newspaper claimed the income tax department was seeking to impose a 30% tax rate. Indian tax professionals have advised their clients to file their returns in the form of capital gains, as they would with stocks, to reduce taxes.
As The Times of India is now reporting, the Finance Ministry is seeking to impose an 18% Goods and Services Tax on digital currency earnings. Through its think tank Central Economic Intelligence Bureau, the ministry presented the proposal to India’s Central Indirect Tax and Customs Council for consideration.
The think tank estimates that India’s digital currency industry processes INR 40,000 crore ($ 5.5 billion) in transactions annually. An 18% tax could earn the government nearly INR 7,200 crore ($ 1 billion).
The think tank has proposed that digital currency transactions be classified as intangible assets, the document reports.
The Indian government’s efforts to tax digital currencies come at a time when many other countries are following a similar path. South Korea passed a tax proposal in July that requires digital currency holders to pay a 20% tax on profits over $ 2,260. This law comes into force in 2022.
However, unlike South Korea, India is seeking to tax an industry it has not yet regulated. The populous country, which is Asia’s third-largest economy, has even tried to ban digital currencies. In September, the Indian government proposed a bill to ban digital currency trading.
The anti-digital currency stance dates back to the Reserve Bank of India’s ban that prohibited banks from processing payments in digital currency. Fortunately, the Supreme Court overturned that ban earlier this year, paving the way for a rapid increase in digital currency trading and ownership in India.
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