India’s ministry of finance is reportedly working on how the goods and services tax (GST) could apply to crypto transactions. “A better understanding of how cryptocurrencies fit into our legal system is the prerequisite for the decision on the GST rate,” a source told local media.
India’s Goods and Services Tax Could Soon Apply to Crypto Transactions
India’s finance ministry is reportedly working on a comprehensive goods and services tax (GST) regime, Livemint reported Monday. A source told the publication:
We are still discussing the applicability of GST in the case of crypto assets. Right now, it is levied on services, so we need to see if crypto assets are declared as a good or service.
Previously, local media reported that the government was considering imposing either an 18% or a 28% GST on crypto assets.
However, the source was quoted as saying: “We can have a special rate for it. It may not necessarily be 18% or 28% — maybe somewhere between that. We have had a few discussions on it and will arrive at a decision soon.”
Another source explained to the news outlet:
A better understanding of how cryptocurrencies fit into our legal system is the prerequisite for the decision on the GST rate.
The GST will only be applicable on the margin or service fees, and not on the entire value of the asset, the publication conveyed, adding that the government is also examining the treatment of certain transactions, like mining or airdropped crypto tokens.
An Indian ministerial panel reportedly met at the end of June to discuss the GST tax on crypto transactions. However, the officials did not disclose any decision that came out of the meeting.
The Indian government has already started taxing crypto income and transactions. A 30% tax on income from crypto assets went into effect on April 1. Additionally, a 1% tax deducted at source (TDS) on payment of crypto assets started applying on July 1.
Meanwhile, the Indian government is also working on the country’s crypto policy. In an effort to become Financial Action Task Force (FATF) compliant, the government plans to finalize its stance on the legality of cryptocurrencies by early next year. Indian Finance Minister Nirmala Sitharaman has also urged the International Monetary Fund (IMF) to take a lead role in developing a global framework for cryptocurrency.
Do you think India will impose a GST tax on crypto? Let us know in the comments section below.
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Author: Kevin Helms