The Indian government’s strict stance on the crypto sector appears to be gaining momentum. In the latest development, the Goods and Service Tax (GST) Council is reportedly planning to introduce the highest GST record of 28% for crypto activities.
Digital assets on par with gambling
Citing unnamed sources, media reports suggested that the mindset at the GST Council is that crypto activities should be treated on an equal footing with casinos, lotteries, gambling and horse racing. All of these speculative ventures incur 28% GST.
Currently, 18% GST is levied on crypto exchanges, which are considered intermediaries selling assets from overseas crypto exchanges to Indians and are officially classified as financial services.
According to the reports, the GST Council established a Legal Committee to oversee various digital asset activities such as trading, Wallet-Investigate services and staking to prepare their tax recommendations.
“There are different aspects of cryptocurrencies – the transactions with cryptos, cryptos used for purchases, cryptos received as payments. All of these aspects are currently being reviewed and discussed by the Judiciary Committee,” CNBCTV18 quoted an unnamed source as saying.
Too many taxes on crypto activities
Along with the expected 28% GST, crypto investors will have to pay 30% capital gains tax and 1% TDS. There are also some duties and surcharges that investors have to pay.
The 28% GST on crypto activities can affect both digital asset companies and individuals, depending on the nature of the transactions. A meeting of state Treasury ministers earlier this month unanimously endorsed 28% GST for speculative activities such as betting and gambling. However, the question of whether the tax should be levied on the gross or the net value left it open for further deliberation.
It is currently unclear which elements of a transaction will be taxed. According to experts cited by CNBCTV18, the 28% GST should be “on the aggregator’s margin or service element and not on the total fee for providing cryptocurrencies.”
Strict stance by the Indian government
A lack of clarity on the applicable GST plate led to Indian tax authorities charging 11 crypto exchanges with nearly $1.08 million in tax evasion earlier this year. Those exchanges were fined and confiscated $1.12 million, Minister of State for Finance Pankaj Chaudhary told the Indian Parliament in March 2022.
Last month, several Indian crypto exchanges halted the rupee deposit option after local regulators relinquished instant retail payment services to them entirely. Exchanges included Coinbase, which launched in the Indian market just three days earlier, Binance-controlled WazirX, and CoinSwitch Kuber.
Source: Crypto News Deutsch