Goods and Service Tax (GST) Council is likely to consider levying 28 percent GST on cryptocurrencies. The government’s view is to bring cryptocurrencies at par with lottery, casinos, race course and betting, sources told CNBC-TV18.
The GST Council has nominated a law committee to take up the proposal to levy 28 percent GST on services and all activities related to cryptocurrencies soon. The law committee’s view will be tabled before the GST Council for a formal nod.
The proposal is likely to be tabled in the next GST Council meeting, but no decision has been taken on the date yet.
“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 said.
The sources said that all 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 an intermediary service. They will have to be classified separately under a new head, under the list of services,” they said.
“So, every transaction will be subject to 28 percent GST, if agreed upon by the GST Council,” the sources added.
Online gaming (without betting) attracts 18 percent GST right now. However, the ones involving betting along with gambling, race clubs, attract 28 per cent.
Earlier this month, the panel of state finance ministers was unanimous on hiking the GST rate on casino, race course and online gaming services to 28 percent, West Bengal finance minister Chandrima Bhattacharya had said. However, a call on whether the tax should be levied on gross or net valuation was to be taken after further deliberations.
Apart from the GST, crypto investors also pay a 30 percent income tax plus cess and surcharges on earnings from virtual digital asset transactions after such a proposal was announced in the 2022-23 Budget. This came into effect on April 1.
The Budget also proposed a 1 percent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which includes individuals/HUFs who are required to get their accounts audited under the I-T Act. The TDS will come into effect from July 1.
Apart from all the taxes, traders also shell out some money as trading fee to exchanges.