After levying a 30% income tax on profits earned from cryptocurrency trading – the Indian government is now reportedly mulling imposing a 28% Goods and Service Tax (GST) on digital assets.
According to the CNBCTV18 report, the government wishes to bring cryptocurrencies like Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) at par with lottery, casinos, and betting.
Indian government's apex body for GST has nominated a law committee to take up the proposal to levy 28% GST on services and all activities related to cryptocurrencies soon, according to the report. The law committee's view would be tabled before the GST Council for a formal nod at the next GST Council meeting.
"There are various aspects of cryptocurrencies — the transactions involving cryptos, cryptos being used to make purchases, cryptos being received as payments. All these aspects are under examination and will be discussed by the law committee," sources told CNBCTV18.
The sources told the outlet that the crypto exchanges in India act as intermediaries. "They sell cryptos from foreign exchanges to people in India. So, this is a service, and currently, this is at 18 percent GST slab and classified as intermediary service. They will have to be classified separately under a new head, under the list of services."
"So, every transaction will be subject to 28% GST, if agreed upon by the GST Council," the sources added.
This move comes as the government, since 2019, has been continuously mulling bringing in a law to regulate the use of cryptocurrencies in India. Starting in April, it announced that the profits earned from cryptocurrency would be taxed at the apex income tax bracket of 30% along with 1% TDS that is due to begin from June this year.
The implementation of earlier rules saw many Indians abandoning crypto trading platforms like Coinbase (NASDAQ:COIN) Global Inc (NASDAQ: COIN), CoinDCX, and WazirX – bringing their trading volume to rock bottom.
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