Indian Government has recently issued notices to top cryptocurrency exchanges as well as the to wealthy crypto traders to pay taxes. However, the government has not yet issued any guidelines about how to go about paying taxes for cryptocurrency.
The Indian government has been trying to crack down cryptocurrency-related tax evasion. The notices issued by them has left the citizens confused about how cryptocurrencies wi;; be tax and seven bitcoin exchanges asking for regulations for clarification.
The Authority of Advance Ruling (AAR) is country’s adjudicatory body that undertakes tax matters. The India Times reported that at least one of the seven top bitcoin exchanges is asking AAR for future tax liability.
As reformatory tax system has been brought into place – GST, now it is needed to know if that will be applicable on the margin earned or total revenue. Furthermore, the indirect tax department is looking to bring bitcoin under GST but this can take time as Bitcoin is a complex subject to understand, and this needs to be done with utmost clarity.
For the exchanges, the rate could depend what the authorities deem deem bitcoin as – goods, services, or currency. If it’s a good, then 18% tax could be levied, or 12% if it’s a service.