Various media sources have reported that India’s GST Council is considering slapping a 28% Goods and Services Tax on cryptocurrency. According to a Hindustan Times story, the tax ideas would be scrutinised by the relevant law committees, who will then submit their recommendations to the GST Council, which oversees the tax. It is led by the country’s finance minister and attended by state finance ministers.
The 28% GST is typically allocated for luxury products and other items that aren’t deemed necessities. It is used in gambling and lotteries, for example, which is what MPs in the country are comparing crypto to when they seek this tax. Several MPs suggested that the GST on cryptocurrencies, like gambling and lotteries, be raised to 28%. Because Parliament is the highest legislative body, their requests will be scrutinised.
According to sources, the GST Council has formed a committee to consider the idea to levy a 28% GST on all crypto-related activities and services. The proposal could be brought up at the GST Council’s next meeting. Sale and purchase of crypto tokens on various exchanges, keeping these assets in centralised and decentralised wallets, and staking on multiple platforms are all examples of cryptocurrency activity. Before making a judgement, the GST Council may review all of these actions.
Since the government proposed a flat 30% tax on revenue from cryptos and other virtual digital assets, reports about the implementation of GST on cryptocurrencies have been circulating. From July 1, 2022, a 1% TDS will be applied to crypto transfers. Crypto trading services are currently subject to an 18% tax.
According to PTI, the government associates cryptocurrency with lottery casinos, betting, gambling, and horse racing. All of these are subject to a 28% GST on the whole value, with an additional 3% for gold. The GST is claimed to be in addition to the government’s announcement in February of a 30% income tax on earnings from virtual digital asset (VDA) transactions in the Union Budget. It then added a 1% tax deduction at source (TDS) for people selling cryptocurrency, which is levied on salaries and other incomes.
Many users have already been turned off by the two fees combined, and the inclusion of a 28% GST could exacerbate the problem. Not only that, but crypto exchanges and users in the country may find it difficult to keep track of all the taxes that would be levied on such transactions.