India has a turbulent relationship with the crypto industry. So far, the crypto industry is not regulated in the country with explicit rules. However, speculations are going on since the Indian government proposed plans to regulate cryptocurrencies in this year’s budget.
According to a report by Businessline, the government is working to bring cryptocurrencies under the Goods and Services Tax(GST) bucket. Digital assets do not have a separate category, and currently, it falls under financial services which attract 18% tax.
As per a GST official, the Goods and Services Tax department views digital assets similar to a casino, betting, horse racing, gambling, and lottery. These categories currently have 28% GST on entire transactions. If crypto could be placed in this section, users will have to pay an additional 28% tax on the crypto transactions.
The GST office currently working to classify the cryptocurrencies and put them into a category that suits them perfectly. Before deciding the tax bracket for the cryptocurrencies it is crucial to finalize its classification, the source adds.
30% Tax on Crypto Earnings
Lately, the country’s finance minister Nirmala Sitharamana proposed a 30% tax on all earnings made through crypto including trading.
According to the documents presented in India’s 2022-23 Budget, the government has planned to levy a 30% of income tax on all crypto assets. This new law on cryptocurrencies would be applicable from April 1, 2022, to all Indian users dealing in cryptocurrencies.
The provision of GST on crypto transactions is not yet given a green light from the Indian government, but the GST office is working to soon classify crypto.
The Indian government has not yet brought any draft on regulating cryptocurrencies. Recently, the country’s finance minister has revealed India’s plan to launch its CBDC (Central Bank Digital Currency) before December this year. The Reserve Bank of India is working on drafting its provisions.
Although the 28% GST on crypto is not yet finalized, putting crypto in the Gambling basket will dampen the motivation of 100.7 million Indian crypto users. Furthermore, it will only help shrink the Indian crypto market and hamper the progress of Blockchain technology.
What is Goods and Service Tax?
Goods and Services Tax (GST) is a comprehensive indirect taxation system in India. A single GST tax is levied on all Goods and Services.
Is crypto taxable in India?
Crypto in India would be taxable under the new law from April 1, 2022. All Indian users will have to pay a straight 30% tax on all earnings made in crypto.
Gargi Sinha is working as Senior Journalist at Confea. She has completed her Masters in Journalism from Delhi University. She has interest in crypto and blockchain technology.