The indirect tax department has launched an investigation into Bitcoin exchanges operating in India to determineat what rate they could be taxed under the goods and services tax (GST) regime, two people with direct familiarity with the matter said.
The development provides the income tax department launched looks on top Bitcoin exchanges including Zebpay, Unocoin and CoinSecure on Wednesday in India.
In line with the indirect tax officers, the investigations started out to probe of a month back and top executives and promoters of some Bitcoin exchanges were asked to make clear their business structure and how much indirect tax — either service tax or value added tax — could be levied on the previous financial year’s revenue.
“There is ambiguity around how much sales tax is applicable on revenues of these startups as the product they deal in is not defined by the current tax laws,” said a person with direct knowledge of the matter. “No satisfactory answer is yet provided by any of these Bitcoin startups.”