India is considering applying goods and services tax (GST) on cryptocurrency transactions according to Bloomberg. This would mean a 18% tax on digital currencies, even though the Reserve Bank of India has recently restricted financial institutions from serving customers who wanted to do transactions related to crypto trading or investing.

Anonymous sources familiar with the matter told also told the news outlet that the Central Board of Indirect Taxes and Custom is yet to conclude the proposal, which also must pass the Goods and Service Tax Council before applying the new taxation. If the legislation passes through, both purchases and sales of cryptocurrencies are going to be taxable in the same way as supply of goods are taxed, on the other hand processes that facilitate those transactions such as transfer, supply, storage or mining would be considered as services.

Value of transactions will be rupee based. In case of a foreign transaction used the equivalent of the convertible currency will be applied. In case buyers and sellers both are located in India, then the buyers’ location will be the place of trade and the transaction would be considered as a supply of software. If the transaction happens outside of the Indian borders an integrated GST will be applied, making the transaction an import or export of goods.

Same sources confirmed that the decisions are yet to be made, nevertheless the government could levy the new tax policy from the 1th of July.

India has been tough on both traders and miners lately, as both the government and the central bankers warned citizens against trading cryptocurrencies. The new tax legislation might turn things upside down as the country must decide what is worth more: Banning digital assets such as BTC to stop money laundering or declare them legal and afterwards taxing them. Let’s see how India decides.