Bitcoin To Be Taxed Like Gold In India
India is trying to figure out how to handle Bitcoin and currently a goods-and-service tax appears a likely outcome as a compromise to banning it.
India is tabling ideas on how to integrate Bitcoin into the country's regulations and, with banning it being an unpopular option, it seems that a goods-and-services tax may be slapped on instead.
In recent months a legal framework has been discussed by Indian officials as to how best to integrate the booming digital currency into its structures. A taskforce has been working to determine the legality of things like Bitcoin under the law in India as there was once a thought to place a full blanket ban on the currency in the heavily populated nation.
Now, however, it is being reported that taxes are the probable outcome from this enquiry which will render the cryptocurrency legal, but also affect its growth as a decentralized alternative currency.
It seems likely that the regulatory regime that comes in to monitor Bitcoin and its affiliated digital currencies will fall under the Securities and Exchange Board of India (SEBI).
This board will then hope to treat digital currencies much like gold; trading it on registered exchanges and thus promoting a formal tax.
This will also allow the regulators to keep tabs on the transactions in order to stop nefarious uses such as money laundering, terror funding, and drug trafficking.
Banning digital currencies has been discussed in India, but also dismissed, which has led the taskforce to consider alternatives that will allow the government some sort of regulation in order to maintain a supervised ecosystem over the anonymous currency.
One of the officials told The Hindu Publication:
"Banning will give a clear message that all related activities are illegal and will disincentivize those interested in taking speculative risks, but it was pointed out it will impede tax collection on gains made in such activities and that regulating the currency instead would signal a boost to blockchain technology, encourage the development of a supervision ecosystem (that tracks legal activities and may also assist in tracking illegal activities) and promote a formal tax base."
This is but one of the ideas that is being tossed around, with another idea to take a less regulated and controlled stance, leaving the risk in the hands of the users.
In this case, cryptocurrencies would not be recognised by the government, and all risks associated will fall onto those who use them, but any illegal activities conducted through them will be addressed.
Blockchain technology, however, will be promoted and held in a separate light from the digital currency it supports.