If the heavy 30% tax and 1% TDS weren't enough to spoil the mood of crypto enthusiasts in India, another big move by the government would surely dampen it.
The goods and services tax (GST) council is reportedly considering levying a 28% tax on cryptocurrencies, at par with the current GST on casinos, betting and lottery, multiple media reports claimed yesterday, as per ET.
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Crypto services such as crypto mining along with sales and purchases are likely to attract the 28 per cent GST if the proposal goes through in the next GST meeting.
The 28% GST will be in addition to the 30% tax already applicable on earnings from crypto-asset transactions.
There is also a 1% TDS (tax deducted at source) on transactions in such asset classes above a certain threshold. Gifts in crypto and digital assets are also taxed.
The date for the next GST meeting is yet to be finalized.
Last month, during a trip to the US, India¡¯s Finance Minister Nirmala Sitharaman had raised doubts about the size of the cryptocurrency market worldwide and stressed the need for a regulatory mechanism acceptable to all countries to prevent its use to launder money and fund terrorism, which, she said, were big concerns for India amidst the cloudy future of crypto in the country.
Although the govt was quick to tax crypto, FM Sitharaman had recently said the govt will not rush into any decision on crypto and will take a considered view.
On the other hand, India¡¯s central bank, RBI, has been quite vocal in its stance against crypto in the recent past. After the Finance Minister had proposed the crypto taxation in the Budget 2022 speech, the RBI governor, Shaktikanta Das, had dropped more bombshells and said crypto is not even a tulip.
Das had said, ¡°I think it is my duty to tell investors that what they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk." The governor further went on to say that crypto investors should keep in mind that these cryptocurrencies have no underlying (asset). Not even a tulip.?
And that¡¯s not all. A few days after this, RBI deputy governor T. Rabi Sankar?had said banning cryptocurrency is the most advisable choice. He had even compared cryptocurrency to Ponzi schemes.
While all these statements and actions indicate the central bank and government¡¯s stance against crypto, the future of crypto in India remains unclear until the much-awaited Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 gets tabled and passed in the parliament.
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