In what appears to be another mood spoiler for crypto investors in the country, Indian tax authorities are planning to put crypto activities in the category of services that attract the highest Goods and Services Tax (GST) of 28 percent. According to reports, the GST council has constituted a committee to study and map different crypto activities such as trading, staking, and wallets for tax purposes with a proposal expected to be tabled in the next GST Council meeting, a formal date for which is yet to be made official.
As of now, crypto exchanges are levied 18 percent GST and are considered intermediaries offering financial services. But as per a CNBC-TV18 report, the GST Council could be planning to club crypto activities with speculative activities such as gambling, lottery, betting, and horse racing.
Sources close to the outlet state that the GST Council, which governs the rules on the goods and services tax, has nominated a law committee to suggest changes to the fitment committee, which will decide on the GST rate for crypto. The proposal of the fitment committee will be sent to the GST Council for final approval.
The move comes after state finance ministers reached a unanimous decision last month to increase the tax rate for horse racing, casinos, and online gaming. To discourage gambling and betting related online games, the GST Council is likely to hike the tax rates for online gaming too from 18 percent to 28 percent, reports suggest.
If the GST is raised from the existing 18 percent to 28 percent, it will be another major blow to the Indian crypto sector. Through the annual budget, the Indian government has already introduced a new taxation policy for the crypto industry that levies a 30 percent capital gains tax and 1 percent TDS on the transfer of digital assets. This move has greatly eroded trade volumes across major Indian crypto exchanges.
On top of the 30 percent income tax on crypto profits, 1 percent TDS, and 28 percent GST in the offing, crypto investors also have to factor in exchange fees, and additional cess and surcharges. All put together, crypto investments are heading in a direction of becoming prohibitively expensive in the country.
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