The Central Economic Intelligence Bureau (CEIB), an arm of the union finance ministry has put forward a proposal to impose 18 per cent GST on bitcoin transactions. The CEIB told the Central Board of Indirect Taxes & Customs (CBIC) that government could potentially gain Rs 7,200 crore annually on bitcoin trading.
The CEIB has conducted a study on levying GST on cryptocurrencies. It suggested finance ministry that bitcoin can be categorised under 'intangible assets' class and GST could be imposed on all transactions, according to a Times of India report. It added that cryptocurrency can be treated as currents assets and GST charged on the margins made in its trading.
Last year, the Supreme Court asked the government to come up with cryptocurrency regulation policies. The apex court in March, this year struck down the curb on cryptocurrency trade in India. The SC quashed an earlier ban imposed by the Reserve Bank of India (RBI) on trading in virtual currencies such as bitcoin.
The RBI had virtually banned cryptocurrency trading in 2018 and had directed that all entities regulated by it shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling those
Currently, bitcoin, as a medium of payment, has neither been authorised nor been regulated by any central authority in India. Further, no set rules, regulations, or guidelines have been laid down for resolving disputes that could arise while dealing with bitcoin. Hence, bitcoin transactions come with their own set of risks.
Early this month, the Enforcement Directorate (ED) arrested a Gujarat-based cryptocurrency trader in connection with a money-laundering probe linked to an online betting racket with Chinese operators. As per media reports, the scam was estimated to be worth Rs 1,000 crore and involved cryptocurrency trading through multiple exchanges.