In what could further spoil the mood of crypto investors in the country, the goods and services tax (GST) Council is likely to consider imposing 28 per cent tax on cryptocurrencies. The proposal is likely to be tabled in the next GST Council meeting.
According to reports the 28 per cent GST will be in addition to the 30 per cent income tax on earnings from crypto asset transactions.
The GST Council has constituted a committee which will soon take up the proposal to impose 28% GST on all a services related to cryptos, CNBC TV 18 reported.
Imposing 28 per cent GST on cryptocurrencies is another shocker for cryptocurrency community in India.
Ankur Gupta, Practice Leader ( Indirect Tax), SW India said that looking at the taxability of cryptocurrency under Direct Tax introduced this year, it was just a matter of time that the taxability under GST also moves from 18% to 28%. Now when it has been made agenda for the next council meeting, it should sail through without any hindrance as well.
However, the imposition of 28% GST and 30% direct tax, would surely bleed out the majority of the profits which people have earned over a period of time when these cryptos are materialized, he added.
Amit Gupta, MD, SAG Infotech said as we all have been hearing for a long time, the government is reportedly considering levying a 28 per cent GST on all crypto transactions, including mining, sales and purchase of cryptocurrencies. There is already a 30 per cent tax being levied on profits made from the sale of crypto assets and NFTs.
“This second GST on crypto transactions is expected to further increase problems for the crypto industry and might even discourage many investors to trade in these digital assets,” Gupta said.
“Levying GST or any other additional tax on crypto essentially puts off the initial original value of decentralisation of digital and financial assets. After the 30% tax already reinforced on crypto, introducing an additional tax shall simply be putting off interests of the investors in the assets. The crypto economy certainly is big now and needs regulations , however the fine line between balance and centralisation needs to be taken care of. The core technology I.e. blockchain behind creation and transaction of such assets itself can be made secure enough to bring in necessary regulations in the sector. Piling up something with layers of taxes should not be a solution to curb things. Somehow, an additional GST would certainly bring the spirit of centralisation more than it brings regulation to the crypto economy,” said Chinka Gupta, CEO, ArcadeNetwork.
Kunal Jagdale, Founder, BitsAir Exchange said soon, a 28 percent GST on services and all cryptocurrency-related activities is proposed. It will be in addition to the 30% income tax on profits from cryptocurrency transactions. Following this initiative, the combination of the two taxes will make crypto currency provincially regulated in India, which is big plus for crypto investors.
He added that the imposition of a 28 percent GST on cryptocurrencies is not surprising given that many other items are subject to a 28 percent GST but it may discouraged a little bit to some users from engaging in cryptocurrency trading.
Meanwhile, the 30 per cent ‘crypto tax’ proposed in the Union Budget came into effect from April 1, 2022. From July 1, 2022, 1 per cent Tax Deducted at Source (TDS) will be applicable on crypto transactions.