In what could further spoil the mood of crypto investors in India, the GST (Good and Service Tax) council is mulling a 28% GST on crypto at par with the present GST on crypto casinos, betting, and also a lottery, as per several media reports on Monday. With that let us have a look at some cryptocurrency news.
What Does GT On Crypto Actually Mean?
Services like crypto mining along with purchase and sale are likely to bring in 28% GST on transaction fees if the proposal travels through the next meeting of GST, reports stated. The date of the next GST meeting has not been finalized yet. As per sources,
“The proposal is to levy 28 percent GST on services and all activities related to cryptocurrencies soon. The law committee’s view will be tabled before the fitment committee, and it is then for the fitment committee to suggest a rate, which is likely to be 28 percent, and post this, the proposal will be taken to the GST Council for a formal nod.”
The Finance Ministry has already levied 30% tax on the profits earned from the transfer of crypto assets and NFTs (non fungible tokens). As per sources,
“There are various aspects of cryptocurrencies – the transactions involving cryptos, cryptos being used to make purchases, cryptos being received as payments. All these aspects are under examination and will be discussed by the law committee.”
India differentiates between crypto assets and digital currencies, and Union Finance Minister Nirmala Sitharaman at the time of the Union Budget 2022-23 in February declared a 30% tax on income from these transaction fees in cryptocurrency, which involves a 1% reduction at source. Her proposition of imposing a 30% tax on crypto profits came into effect on April 1. The 28% GST on crypto will be in addition to the 30% existing taxation on crypto taxation. Along with that, there is also 1% TDS (Tax Deducted at Source) on transactions in similar asset classes beyond a certain threshold. Gifts in digital assets and cryptos are also taxed. A new section known as ‘115BBH’ has been added in the Income Tax Act, 1961, to tax digital assets.
At the time of a trip to the United States last month, the finance minister raised concerns about the size of the digital currency space globally and stressed the requirement for a regulatory structure that is accepted by all nations to stop the use of fund tourism and money laundering, which she stated were huge concerns for India. At a seminar that was hosted by the International Monetary Fund (IMF), Sitharaman said,
“I think the biggest risk for all countries across the board will be on the money laundering aspect and also on the aspect of currency being used for financing terror.”
The minister had previously raised doubts regarding the size of the digital currency space. She said,
“We are not sure about the veracity of the data, which says the volume is this much or that much. Those numbers are questionable.”
The GST (Goods and Service Tax) Council is soon likely to think of levying 28% GST on crypto. The view of the government is to bring digital currencies at par with lotteries, race courses, casinos, and betting. This will be added to the 30% tax that is levied on crypto transactions. Only time will tell what is the real future of crypto in India.
Frequently Asked Questions On GST On Crypto
1. Is there GST on cryptocurrency?
As per the latest sources, India is planning to levy a 28% GST on cryptocurrency along with the prevailing 30% tax on crypto transactions.
2. How much tax do you pay in crypto?
From April 1, 2022, Indians are paying 30% tax on their crypto transaction and that is also applicable on crypto gifts and NFTs.
3. Is there a crypto tax in India?
A tax of 30 percent is levied on any profits from the transfer of crypto assets. The latest tax provisions were brought into effect on April 01, 2022.
4. Can GST be charged on sale of cryptocurrency?
The government is functioning on the classification of digital currency as goods or services under the GST law, so that tax can be imposed on the complete value of transactions.