The current status of virtual currencies in the country is not definite yet. However, the Reserve Bank of India has given banks three months to stop servicing entities working with virtual coins.
And the authorities decided to get a share of the profits. At the moment the Income Tax Department of India has sent out notes to crypto traders in an attempt to collect dues. The regulator believes that unless virtual currencies are taxed actively, the liabilities would rise and become hard to recover.
The local investigative organizations propose that only trades beyond India should be taxed with GST and that would be seen as import or export of goods. The circulation of electronic currencies around the country’s territory would be considered as a supply of commodities or services, depending on the methods of operating them and will be taxed accordingly.
Indian regulators may introduce GST retrospectively as of July 1, 2017– the day when the new implicit tax regime was introduced. However, they have not come to any decision yet.
Miners to be taxed
Solving cryptographic puzzles will be treated as the provision of services, as it helps produce virtual coins, involves commission and rewards. Taxes will be taken from transaction fees or the rewards.
However, the local crypto traders believe that if all these taxes are implemented after all, they will find other ways of selling and buying digital assets. Around the world, there are peer-to-peer platforms that allow crypto trading without any intermediaries.