Surprise! GST on crytocurrency? Bitcoin tanks as India mulls crypto tax

Bitcoin prices slipped over 7 per cent in the last 24 hours on Thursday following reports India is mulling slapping a tax on cryptocurrencies in the form of the Goods and Services Tax (GST). At 2:30 pm, Bitcoin was trading at $7,335.85, down 7 per cent from $7900-odd level it traded in the previous session at the same hour, data available with Coindesk showed.

The fall came after a Bloombergquint report, citing unnamed sources, claimed that the government may levy an 18 percent GST on crytocurrencies. "The proposal, being considered by Central Board of Indirect Taxes and Customs, will be tabled before the GST Council after it’s finalised, the report said. 

According to the report, cryptocurrencies that are “facilitating transactions like supply, transfer, storage, accounting, among others, will be treated as services” and so they will also receive the 18 per cent crypto tax in Indian Exchanges and miners would also be considered taxable. The levy could be applied retroactively to all trades that took place on or after July 1, 2017, the report added.

The news came after The Reserve Bank of India (RBI) last month barred banks and financial institutions from dealing with virtual currencies including Bitcoins.

“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs (virtual currencies),” the RBI said in a statement on Thursday. “Regulated entities which already provide such services shall exit the relationship within a specified time.” 

RBI said it has repeatedly cautioned users, holders and traders of VCs, including Bitcoin, regarding various risks associated in dealing with such virtual currencies.