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Indian Government recently reported working upto the crypto classification under the GST laws and put the tax on it accordingly
In February, when The 2022-2023 budget was presented in the Indian Parliament, it consisted of a declaration of putting 30% tax on all the crypto related transactions. However, drafting rules and regulations takes time, which is happening with crypto taxation policy. Recently it’s been reported that the Indian Government is planning to keep cryptocurrency under the classification of goods and services. It could be held under the tax slabs of GST laws and, accordingly, can tax entire transactions’ value.
As for now, there is a goods and services tax (GST) of 18% that is levied on crypto exchanges that provide transaction and exchange services and are categorized under financial services. The reason for putting a GST of around 28% on cryptos is that GST officers considered it similar to that of lottery, betting, gambling, casinos, horse racing, etc., that come under the same tax slab.
An official said that there is a need for clarity regarding putting GST on digital assets and should it be levied on the entire value or a portion of it. The official said that they are keeping an eye on whether to classify cryptocurrencies as goods or services and remove doubts regarding calling it an actionable claim.
Another official said that if the goods and services tax is imposed on the whole cryptocurrencies transactions, then the tax rate could range from 0.1 to 1 percent. He also stated that discussions are going on and are at the initial stages of tax rates, whether it should be 0.1% or 1%. So the priority would be to classify the digital assets category first and then discuss its tax rate.
There is no classification of cryptocurrency in current goods and services tax law. Hence in the absence of any law on regulations of such virtual digital assets, there is a need to consider their classification whether or not the legal framework explains it as an actionable claim. For those actionable claims that are not known, it’s a claim that the creditor can make for any type of debt other than secured debt by a mortgage or any immovable property.
As far as the budget 2022-2023 is concerned, in which crypto tax announced to be 30 percent in addition with cess and surcharge would become into action from 1st April. Additionally, TDS payment of 1% on payments towards cryptocurrencies more than Rs.10,000 in one year and taxation on gifts in recipients’ hands.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
