Preparation to impose 28 percent GST on crypto transactions in India

Preparation to impose 28 percent GST on crypto transactions in India
Written by Arindam
Preparation to impose 28 percent GST on crypto transactions in India

There may be a big setback for crypto investors in the country. Tax authorities are planning to put crypto activities in the category of services that attract the highest Goods and Services Tax (GST) of 28 per cent. The GST Council has assigned a committee to study various crypto activities like trading, staking and wallets for tax purposes.

A proposal in this regard can be presented in the next meeting of the GST Council. The date of this meeting has not yet been decided. Crypto exchanges currently attract 18 per cent GST and are considered as financial intermediaries offering financial services. According to a media report, the GST Council may consider linking crypto transactions with betting activities like gambling, lottery, betting and horse racing. Sources associated with the GST Council said that a law committee has been formed to suggest the fitmate committee in this regard. The fitmate committee will decide the GST rate on crypto activities.

The proposal of the fitment committee will be sent to the GST Council for final approval. Last month, state finance ministers agreed to increase tax rates for horse racing, casinos and online gaming. With this, online games related to gambling and betting will be strictly enforced. The GST Council may also increase the tax rate on online gaming from 18 percent to 28 percent.

If the GST on crypto activities is increased from 18 percent to 28 percent then it will be another big blow to the crypto segment. In this year’s budget, the government announced a tax-related policy for the crypto industry. Under this, 30 percent capital gains tax has been imposed on digital assets and 1 percent TDS has been imposed on their transfer. This has greatly reduced the trading volume on crypto exchanges. Crypto investors will have to add 30 per cent tax on profits, 1 per cent TDS and possible GST of 28 per cent in addition to exchange fees and additional cess and surcharge. This will make investing in crypto very expensive. This will also have an impact on crypto transactions.

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