We have previously reported about how India’s central bank, the Reserve Bank of India (RBI), had banned domestic financial institutions from providing banking services to cryptocurrency exchanges in India, and how, in a decision on March 4, 2020, the India Supreme Court struck down the RBI ban as unconstitutional. Now, the Times of India is reporting that the Indian government is weighing a proposal to impose an 18% goods and services tax on Bitcoin transactions. It is estimated that the tax could raise about 7,200 crore annually (USD 1 billion).
The proposal would recognize Bitcoin as an “intangible asset” and the tax would be charged on the margins made in its trading. While many cryptocurrency advocates would probably prefer that Bitcoin be treated as a currency, the tax proposal certainly indicates that the government is becoming more comfortable with cryptocurrency. It is nevertheless noteworthy that the proposal is limited to Bitcoin and does not cover any other cryptocurrencies.