Cryptocurrency conundrum! GST Board plans to impose heavy tax: report
In what could further sour the mood of crypto investors in the country, the Goods and Services Tax (GST) Board will likely consider imposing a 28% tax on cryptocurrencies. The proposal will likely be tabled at the next meeting of the GST Board.
According to reports, the 28% GST will be added to the 30% income tax on income from crypto asset transactions.
The GST Council has formed a committee that will soon take up the proposal to impose 28% GST on all crypto-related services, CNBCTV 18 reported.
The imposition of 28% GST on cryptocurrencies is another shock to the cryptocurrency community in India.
Ankur Gupta, Practice Leader (Indirect Tax), SW India said that looking at the taxation of cryptocurrency under the direct tax introduced this year, it is only a matter of time. so that the taxation under GST also goes from 18% to 28%. Now that it has been put on the agenda for the next council meeting, it should also pass unimpeded.
However, imposing 28% GST and 30% direct taxes would surely bleed away the majority of profits people have made over a period of time when these cryptos materialize, he added.
Amit Gupta, MD, SAG Infotech said that, as we have all heard for a long time, the government would consider levying 28% GST on all crypto transactions, including mining, sales and purchase of cryptocurrencies. A 30% tax is already levied on profits from the sale of crypto assets and NFTs.
“This second TPS on crypto transactions is expected to further increase the problems for the crypto industry and may even discourage many investors from trading these digital assets,” Gupta said.
“Collecting GST or any other additional tax on crypto essentially delays the initial initial value of decentralizing digital and financial assets. After the already tightened 30% tax on cryptos, introducing an additional tax would only put off investors’ interests in the assets. The crypto economy is certainly big now and needs regulation, but the fine line between balance and centralization needs to be considered. The core technology, i.e. the blockchain behind the creation and transaction of these assets itself, may be secure enough to introduce necessary regulations to the industry. Piling something with layers of taxes shouldn’t be a way to hold things back. Either way, an additional GST would certainly bring the spirit of centralization more than it brings regulation to the crypto economy,” said Chinka Gupta, CEO of ArcadeNetwork.
Kunal Jagdale, founder of BitsAir Exchange, soon said that a 28% GST on services and all activities related to cryptocurrency is proposed. It will be in addition to the 30% income tax on profits from cryptocurrency transactions. Following this move, the combination of the two taxes will make cryptocurrency regulated at the provincial level in India, which is a big plus for crypto investors.
He added that the imposition of a 28% GST on cryptocurrencies is not surprising given that many other items are subject to a 28% GST, but it may put some users off a bit. engage in cryptocurrency trading.
Meanwhile, the 30% “crypto tax” proposed in the Union budget came into effect on April 1, 2022. From July 1, 2022, a 1% withholding tax (TDS) will be applicable on crypto transactions.