The Indian government plans to classify digital currency exchanges as e-commerce platforms, and will also impose a 1% tax deduction under the goods and services tax (GST) regime, local news agency Business Standard reports.
The GST, which has been effective since July 2017, is levied on the supply of goods and services in the country. It is a “comprehensive, multi-stage, destination-based tax” that is charged “on every value addition.”
“The government is looking at classifying cryptocurrency exchanges as e-commerce platforms and imposing 1 per cent tax collected at source on them under the goods and services tax (GST) regime. The planned move is aimed at monitoring virtual currency transactions if the government decides to regulate the space,” according to the report.
A progressive step
The decision by the government would mean that, while digital currency would be accepted as virtual currency, buying and selling would be regulated and monitored by the government using the GST.
It is, however, likely to be received as positive news to the Indian digital currency community and could be a sign of commitment by the government to further the progression of the digital currency market in the country. The news follows another report about a possible blanket ban on digital currency in the country circulated.
With the e-commerce plan, digital currency exchanges will be classified into three categories: those that will act as market facilitators, brokerages that will allow the buying and selling of digital currency, and trading platforms that will provide an interface for trading. Nonetheless, all the categories should be registered under GST and pay a tax collected at the source (TCS).
Considering the new and possible regulations of the digital currency sector, many top exchange agencies, like WazirX and Bitbns, have stopped their advertisements for now.
Watch: CoinGeek New York panel, BSV vs. Other Blockchains: Differences that Matter for Developers & Businesses
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.