Cryptos May Attract Highest GST Rate of 28% in India

Cryptos May Attract Highest GST Rate of 28% in India

The GST council may broaden the indirect tax net over crypto currencies, placing the under the highest tax slab of 28%.This comes at a time when a30%income tax is already imposed on income from cryptos and other virtual transactions, with effect from April 01,2022.

The recent developments are in line with the demands by some members of parliament to include all activities involving crypto-currencies under GST. Thus, various aspects like mining, sale and purchase, and their exchange value for buying or bartering goods and services, are under consideration. All such activities may invite the Goods and Services Tax. At present, one component of crypto is covered under indirect tax -the service provided by crypto exchanges, at 18% GST. It is proposed that the tax should be imposed on the overall transaction value rather than only on the part of services provided by crypto exchanges.

Another issue raised by the lawmakers is about the legal status of crypto currency. Many have demanded to treat cryptos like lottery and gambling; hence place the under the highest tax slab of 28%.

Apart from the above tax -rate related matters, the GST council needs to look in too there aspects related to crypto -currencies. The GST law is ambiguous about classification of cryptocurrency as a good or a service. The next important aspects include location and time of virtual transactions, the parties involved and the overall relation between GST and crypto currency.

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