18% GST on bitcoin transactions, Centre’s plan to generate Rs 7,200 crore annually: Report

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The central government is exploring the option of imposing an 18 percent goods and services tax (GST) levy on bitcoin transactions, a move that could potentially generate Rs 7,200 crore annually.

The Central Economic Intelligence Bureau (CEIB) has sent a proposal on the matter to the Central Board of Indirect Taxes & Customs (CBIC), according to a report by The Times of India.

The CEIB has pegged the value of bitcoin transactions in the country at Rs 40,000 crore annually, the report added. The board had conducted a study on implementing GST on cryptocurrencies.

Moneycontrol could not independently verify the story.

Also read: Surging investor interest sends bitcoin to peak past $23,000

The CEIB, a part of the finance ministry, said bitcoins can be categorised under the "intangible assets" class and be treated as current assets, sources told The Times of India. The board proposed that GST can be levied on the margins made while trading in the cryptocurrency.

Bitcoin, the most-valuable cryptocurrency, has gained more than 200 percent in 2020 and touched a record high of over $23,000 on December 17.

Digital currencies are currently unregulated in India. The Supreme Court, in March, set aside a 2018 circular by the Reserve Bank of India (RBI), which barred banks and financial institutions from providing services related to cryptocurrencies.