The relationship between bitcoin and India has always been a complicated one. Following a lengthy period of preventing bitcoin companies from doing business with banks, India now says it’s considering imposing a large Goods and Services Tax (GST) on all BTC transactions.
India Wants to Impose a GST Tax On BTC
The tax would be around 18 percent. To qualify for the tax, a transaction must be worth more than 40,000 crores. The news comes by way of the Central Economic Intelligence Bureau (CEIB), a division of the country’s finance ministry. The firm has pitched the idea to the Central Board of Indirect Taxes and Customs (CBIC) and claims that this could provide the Indian government with an additional 7,200 crores each year in tax-related revenue alone.
India has never had a positive outlook on bitcoin. In early 2018, the company initiated a ban that prevented all bitcoin and crypto businesses from working with standard banks. Thus, they could not garner bank accounts and were blocked from standard funding and traditional monetary services.
The ban remained in place for roughly two years, though eventually the country’s Supreme Court would deem this kind of activity unconstitutional. The ban was later removed, and it looked like India was really on its way towards becoming a solid bitcoin and cryptocurrency hub, though this is now looking like a dank possibility as well not just because of the new tax, but because India has hinted that it is now looking to ban all crypto trading on a general scale.
The idea was widely criticized, as many analysts believed that with bitcoin and blockchain becoming mainstream forms of finance, the country would initially fall behind its neighbors and lose its competitive edge in the world of modern trades.
However, this new tax could be a direct response to that criticism. While this is purely speculative at the time of writing, it could be alleged that India is listening to the analysts and taking note. Thus, it isn’t looking to ban crypto altogether like it originally announced. Instead, it thinks it can make a little money off its growing crypto base.
It’s Time for Regulators to Step Up
CEIB has said it would like to categorize bitcoin and other forms of crypto as “intangible assets,” which would allow the tax to be levied. One of the big problems that India is facing right now is that cryptocurrency is an unregulated haven. Thus, the government has the right and the leeway to view it through any lens it desires and take steps it deems necessary regardless of what traders think.
Perhaps the newfound tax assessment on bitcoin transactions will give regulators the boost they need to step forward and implement the correct rules so that bitcoin trades don’t have to be so expensive. The GST could potentially lead to the death of crypto activity in India given that people aren’t willing to lose that much money.