The Goods and Services Tax (GST) council is reportedly waiting to decide whether crypto assets are declared as goods or services by the finance ministry before drawing up a comprehensive indirect tax regime for the asset class. As per a recent report quoting sources close to the government’s proceedings, the finance ministry is currently working on breaking down the technological characteristics of cryptocurrencies before determining if a unique GST slab could be agreed upon for digital assets. The government reportedly intends to ensure that the exchequer does not lose revenue due to the ambiguous nature of crypto assets.
As per a report by Mint, citing two sources close to the matter, a new GST slab between 18 percent and 28 percent, could be allocated to crypto assets. The finance ministry is reportedly working on defining the characteristics of cryptocurrencies, and the digital assets place in the country’s existing legal framework, before a new GST rate is decided.
“We are still discussing the applicability of GST on crypto assets…Right now, it is levied on services… So we have to see whether crypto assets are declared as good or services. We can have a special rate for this. It may not necessarily be 18 percent or 28 percent. Maybe somewhere in between. We have had a few discussions on it and will reach a decision soon,” said one of the sources speaking to the publication.
The matter of crypto taxation by the country’s GST Council has been a heated one thus far. Back in May 2022, several reports suggested that the council was planning to club crypto activities with speculative activities such as gambling, lottery, betting, and horse racing — which would raise the GST charged on cryptocurrencies to 28 percent. At the time, the council had also set up a committee to study and map different crypto activities such as trading, staking, and wallets for tax purposes.
As of now, crypto exchanges continue to be levied 18 percent GST and are considered intermediaries offering financial services.
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