Indian Government Is Considering Adding a GST Tax to Cryptocurrencies
September 28, 2022 9:15 AM
The Indian government's finance ministry is reportedly considering how the country's goods and services tax (GST) might be applied to cryptocurrency exchanges. According to a source quoted by local media, determining the GST rate will be impossible until more is known about the place of cryptocurrencies in the law.
As of late, crypto purchases may be subject to India's Goods and Services (GST) Tax.
As reported by Livemint on Monday, India's finance ministry is preparing to implement a comprehensive goods and services tax (GST) regime. According to information obtained by the publication:
"The question of whether or not cryptocurrency assets are subject to GST is still up for debate. Currently, it is only applied to services, so it remains to be seen whether or not crypto assets will be classified as goods."
Earlier, it was reported by local media that the government was thinking about imposing a GST of between 18% and 28% on crypto assets.
However, the source was quoted as saying, "We can have a special rate for it." It could be somewhere in the middle of 18% and 28%. We've had some talks about it, and a conclusion is on the horizon.
According to another source who spoke with the media:
"A decision on the GST rate requires a deeper comprehension of the place of cryptocurrencies in our legal system."
The publication explained that the GST would be levied only on the margin or service fees and not on the entire value of the asset, and that the government was also looking into how certain transactions, such as mining or airdropped crypto tokens, should be handled.
The GST tax on cryptocurrency transactions was reportedly discussed at the end of June by an Indian ministerial panel. To the public's dismay, however, the officials did not reveal the meeting's outcome.
Indian authorities have begun collecting taxes on cryptocurrency earnings and transactions. On April 1, a 30% tax was implemented on crypto asset earnings. On the same note, as of July 1, a 1% TDS tax was applied to the value of cryptocurrency payments.
Meanwhile, efforts are being made to develop a crypto policy for India. The government plans to finalize its position on the legality of cryptocurrencies by the beginning of next year in an effort to become Financial Action Task Force (FATF) compliant. Nirmala Sitharaman, India's minister of finance, has also called on the IMF to play a pivotal role in establishing a worldwide regulatory framework for cryptocurrencies.