All the services provided by the crypto exchanges in India are classified as financial services under the bracket of 18 % GST.
But now the whole cryptocurrency transactions may be treated as goods or services and may come under GST law. This would result in levying of tax on the complete value of transactions.
The move comes in a view that Cryptocurrencies should be treated at par with lottery, casinos, race course and betting.
“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,” as quoted in news report by CNBCTv18.
A law committee has been nominated by the GST council of India to consider the proposal of 28% GST on the digital assets and present its view to the council for the final approval. The proposal will be made before the GST council in the next meeting.
The biggest dilemma so far with the treatment of cryptocurrency is whether to consider it as a good or a service. So in order to take a fair decision on the matter, it is required to look at both technical as well as legal aspects of the digital assets and currencies.
The Budget this year has already been too heavy on crypto community. The introduction of 30% income tax on all crypto gains from April 1, 2022 and a mandatory deduction of TDS at the rate of 1% on all crypto payments above 10, 000 was a step to discourage people from investing in crypto coins and assets.
The state governments are already in the process of raising the GST from 18% to 28% on casino, race course and online gaming (without betting). Currently, services involving betting along with gambling, race clubs, attract 28% interest.
However final call is yet to be taken on the matter. The market expert opine that such a move can lead to loss of interest in the investment in digital assets and currencies.
