Contrary to several media reports, the GST council is not going to impose 28 per cent GST on crypto services, sources at the Finance Ministry told Business Today.
“No proposal of 28% GST on crypto services. Crypto services will not to be treated at par with online gaming”, the source told Business Today.
Multiple media sources reported recently that the GST council is considering a 28 per cent tax on cryptocurrency, similar to the present GST on online gaming, casinos, betting, and lottery.
Those reports also claimed that services like crypto mining, as well as sales and purchases, would be subjected to the 28 per cent GST.
The recent Union Budget slapped a flat 30 per cent tax on all crypto gains plus a one per cent TDS. This led to a steep drop in trading volumes across all KYC compliant cryptocurrency exchanges in the country.
Moreover, KYC compliant exchanges also came under heat from NPCI. The regulator released a statement that it is not aware of any Indian exchange allowing its customers to buy cryptocurrencies via UPI after Coinbase exchange’s very public launch in India.
After NPCI’s statement, UPI was withdrawn from all exchanges operating in India.
Furthermore, fintech giant Mobikwik also withdrew its services from KYC compliant Indian crypto exchanges.
Saket Patwari, Executive Director, Indirect Tax, NEXDIGM told Business Today, "Not subjecting cryptocurrency to tax would boost investments in this digital asset. This is a welcome move for boosting the financial service segment by attracting further entrants and investments and entailing the markets to rise.
However since the transaction is already subject to direct tax similar to lottery, betting and gambling. This move could also give rise to varied interpretations and will keep it open for the department to litigate it further. To mitigate this the government will need to clarify their position clearly in the imminent FAQ to be issued in this regards."
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