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Less than a year ago, India’s Supreme Court decided to overrule the central bank’s decision to forbid all other banks in the country to serve crypto businesses. With this rule revoked, the country’s crypto industry began to flourish, which led the government to the idea of introducing crypto taxes.
Now, a new proposal recommends that the government impose an 18% tax on Bitcoin trading.
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India’s government could secure $1b in Bitcoin taxes
According to recent reports, the Indian Finance Ministry’s Central Economic Intelligence Bureau (CEIB) is the party that proposed the taxation of Bitcoin trading. The Times of India reported that Bitcoin trading in the country amounts to approximately 40,000 crore INR, or $5.5 billion,
By introducing an 18% tax on BTC trading, the government will effectively secure around $1 billion, or 7,200 crore INR in tax revenue alone.
Furthermore, the CEIB requires the government to recognize Bitcoin (BTC) as an intangible asset. This is necessary in order to impose a GST levy on the country’s total crypto transactions.
India’s crypto scene is rapidly developing
Like many other regions around the world, India does not have cryptocurrency regulations. This has led the authorities to become quite concerned about the potential usage of BTC for illegal activities, such as betting, or money laundering.
India is the third-largest economy in Asia, and one of the fastest-growing economies on a global level. But, as far as the cryptocurrency industry goes, it has faced quite a few regulatory issues, with the mentioned case of the Reserve Bank of India imposing bans on working with crypto businesses being only one of them.
Meanwhile, the country’s crypto sector continues to grow, partially due to coronavirus, and partially due to pure interest in new forms of money. Its largest crypto exchange, CoinDCX, reported massive growth in both, daily users and volume.
The exchange said that there was a 3x growth when it comes to overall volume, while the quarter-over-quarter growth of daily users went up by 4x in Q2 2020 alone. The exchange also reported a 12% increase in sign-ups, as well as a 20% increase in volume, with the figures being even higher when it comes to Month-on-Month (MoM) growth.