The sources said that the government plans to bring the crypto assets under the Goods and Services Tax (GST) regime soon. Through this, the government intends to check the revenue loss due to the uncertain nature of these assets.
Sources said that the Finance Ministry is working on the features of cryptocurrencies, their use, etc. The government is mulling on deciding the crypto assets as a good or service to bring them under GST.
Also, once the legal nature of cryptocurrencies is decided, the ministry intends to create a special GST rate between 18% to 28%. Currently, the government is trying to understand better how cryptocurrencies would fit into our legal system, as it is a prerequisite for deciding the GST rate.
Sources say that the GST will only be applicable on the margin or service fees but not on the entire value of the asset. Also, the government is examining the treatment of a few transactions, such as mining or airdropped crypto tokens.
This move comes amid continuous debates on crypto taxation in India, and the Reserve Bank of India (RBI) announced that these might threaten the nation’s financial stability. Besides, the central government is in touch with banks and several agencies to bring consensus on regulating these assets.
Earlier, during Budget 2022-23, the government announced that the transfer of any virtual/cryptocurrency asset is taxed at 30%. Also, it clarified that taxpayers can deduct only acquisition costs and can not carry forward the transaction losses. From 1st July 2022, it also introduced TDS on virtual assets for more than Rs 10,000 in a year and taxation of such gifts in the hands of recipients.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.