The Goods and Services Tax (GST) council is said to wait to decide whether crypto-assets are declared as goods or services by the Department of Finance before developing a comprehensive indirect tax regime for the asset class. According to a recent report citing sources familiar with government proceedings, the Ministry of Finance is currently working to break down the technological characteristics of cryptocurrencies before determining whether a single GST slab could be agreed upon for digital assets. The government reportedly intends to ensure that the Treasury does not lose revenue due to the ambiguous nature of crypto assets.
According to a Mint report, citing two sources familiar with the matter, a new slice of GST of between 18% and 28% could be allocated to crypto-assets. The Ministry of Finance would work on defining the characteristics of cryptocurrencies and the place of digital assets in the country’s existing legal framework, before a new GST rate is decided.
“We are still discussing the applicability of GST on crypto assets…Right now it is levied on services…So we need to see if crypto assets are declared as goods or services. We may have a special rate for this. It’s not necessarily 18% or 28%. Maybe somewhere in between. We’ve had some discussions about it and we’ll make a decision soon,” one of the sources speaking to the publication said.
So far, the issue of crypto taxation by the country’s GST Council has been heated. In May 2022, several reports suggested that the council planned to combine crypto activities with speculative activities such as gambling, lotteries, betting and horse racing, which would increase the GST charged on cryptocurrencies. at 28%. At the time, the board also set up a committee to study and map different crypto activities such as trading, staking, and wallets for tax purposes.
Currently, crypto exchanges continue to be charged 18% GST and are considered intermediaries offering financial services.
Cryptocurrency is an unregulated digital currency, which is not legal tender and is subject to market risk. The information provided in the article is not intended to be and does not constitute financial advice, business advice or any other advice or recommendation of any kind offered or endorsed by NDTV. NDTV shall not be liable for any loss resulting from any investment based on any perceived recommendation, forecast or any other information contained in the article.
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