India Plans to Impose 18% Tax on BTC Transactions

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According to news from the Central Economic Intelligence Bureau (CEIB), the Indian government is planning to impose an 18% tax on Bitcoin trading. India has been indecisive on cryptos for a long time. There was a time not that long ago when the government was planning to shut Bitcoin transactions down. However, it has finally realized that taxing the transactions would bring more money into its budget, to the tune of an extra $1 billion per year.

While it’s not the most popular move, it still legalizes BTC transactions. For this to happen, the government must change the laws a bit, categorizing Bitcoin in a new assets class.

A Levy Imposed on All Crypto Transactions

According to sources from the CEIB, Bitcoin will be categorized under intangible assets. This class means that a GST levy will be imposed on all crypto transactions, with many suggesting that crypto assets will be treated as current assets.

So far, the Indian government has failed to regulated cryptocurrency exchanges. Trading with Bitcoin has grown significantly in the Asian country, with billions washed away illegally every year. Trading has become a massive challenge for Indian lawmakers, especially after the two-year ban imposed by the RBI on all financial institutions in India that deal with digital assets of any kind.

However, there’s no regulator for cryptos at all, which has led to illegal crypto transactions and a lot of money being laundered. If Bitcoin and cryptos are regulated as intangible assets, this will eventually be turned to legal trading, resulting in an extra $1 billion every year.

Earlier in December, the ED arrested a Gujarat-based crypto trader who was involved in a money-laundering scheme. He was working on behalf of Chinese companies that released apps banned in India. This was a breaking point for the government, resulting in a new draft law that can impose a tax on Bitcoin transactions and stop massive money-laundering schemes.

Banks Doing Business with Cryptos

After the Indian Supreme Court squashed the controversial RBI ban on crypto transactions imposed in early 2018, banks allowed their customers and exchanges to deal with cryptos through them. With Bitcoin’s price on the rise, many clients asked to open up specific accounts, and after a lot of hesitation, banks are opening them up right now.

Bitcoin has finally broken the $20K deadlock and is on track to break new records. Indian banks have realized that there’s a lot of potential to make some money and now allow customers to deal in crypto. While that has stayed unregulated so far, the new law will impose a tax on these transactions too.

It remains to be seen what this means for other industries such as Bitcoin casinos. That market is still unregulated, yet many gaming sites offer their services to Indian players. So far, everything has been on the hush-hush, with Indian players exchanging their cryptos to play casino games at foreign sites. With the new tax and the government’s recognition of Bitcoin as an asset, there will clearly be major changes.

December 30, 2020: • No Comments

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