After the recent raids by Income Tax Department on Bitcoin exchanges, a new probe has been started. The indirect tax department has started an investigation into the Bitcoin exchanges operating in India including Zebpay, Unocoin and CoinSecure to ascertain at what rate they can be taxed under good and service tax (GST).
Both the direct and indirect tax department officials are currently questioning the top management of seven companies about the nature of business model and taxability.
Bitcoin does not qualify as a currency or money under the Indian laws, therefore creating tax complications. The probe has started after the startup companies posted a huge transactional increase in the recent months.
Due to lack of laws dealing with such currencies, the Indian tax department may put a tax fee on the commission charges such startups take from the customers. It will be a viewed as service. If the Indian startups sell coins outside India, then it will be viewed as 'export'. It is not clear what tax structure will be applicable on Bitcoins in India but soon, it will be there.
What does it mean to the Bitcoin customers?
If you are using the Indian services like Zebpay, you may have to pay a higher commission charge per transaction, which will include the new tax. However, if you're using services of foreign country based providers, the charge may not be applicable as of now. The current bitcoin holders should not face a problem, only new transactions will be taxed.
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