The government is very much likely to consider a proposal to impose 18 per cent GST on Bitcoin transactions, which is estimated to be about Rs 40,000 crore annually. The proposal has been put forward by the Central Economic Intelligence Bureau (CEIB), an arm of the finance ministry.
It highlights that the government could potentially receive Rs 7,200 crore annually on Bitcoins trading in the country. The CEIB suggested that the cryptocurrency can be categorized under intangible assets class, and a GST levy could be imposed on all transactions.
The think tank has conducted a study on levying GST on cryptocurrencies. It suggested that cryptocurrency can be treated as currents assets and GST charged on the margins made in its trading. The Supreme Court, in 2019, had asked the Centre to come up with cryptocurrency regulation policies. As such, in March this year, the apex court struck down the curb on cryptocurrency trade in India. The Supreme Court quashed an earlier ban imposed by the Reserve Bank of India on trading in virtual currencies such as Bitcoin.
In 2018, the central bank had virtually banned cryptocurrency trading and had directed that entities regulated by it shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with the same.
CEIB’s recommendations come amid a boom in crypto trading, especially in Bitcoin, which has been driven by the COVID-19 pandemic. Nischal Shetty, Founder and CEO of WazirX, had earlier attributed the growing interest and demand in cryptocurrency to the lockdown. “People have more time to understand and learn new things. Also, a lot of people are looking for new avenues of making money online, as they don’t have a job right now or their jobs are offline, and they can’t go to work,” Shetty had said.