GST Council, which is the highest decision-making body for indirect taxes in India, will reportedly consider levying a 28% goods and services tax on cryptocurrencies during its next meeting, according to sources. The government’s opinion is that cryptocurrencies should be kept at par with lotteries, casinos, racecourses, and betting.
The GST Council will take up the proposal to levy 28% GST on services and all activities related to cryptocurrencies soon, according to sources who have been briefed on the matter. The GST Council will nominate a law committee to address the issue.
The proposal is likely to be tabled in the next GST Council meeting however, the date of the meeting has not been declared yet.
30% tax on gains on cryptocurrency
Finance Minister Nirmala Sitharaman announced a 30% tax on cryptocurrencies and assets in the Union Budget 2022. No deductions will be allowed, except for the cost of acquisition, and no transaction losses can be used to offset the gains. A new section 115BBH has been added in the Income Tax Act, 1961, to tax virtual and digital assets.
The GST Council in its meeting might also consider a proposal to do away with the five per cent slab by moving some goods of mass consumption to the three per cent category and the remaining to the eight per cent category, as per the reports.
No laws are made to regulate cryptocurrency yet
At present, the legal position of cryptocurrencies, such as Bitcoin, is also unclear as there are no laws regulating cryptocurrencies in the country. After the Union Budget tax proposal on the cryptocurrencies, investors said the provisions have effectively legalised crypto trading. However, Finance Minister Nirmala Sitharaman has stated that taxing cryptocurrencies does not mean they have been legalised, and that matter is still being discussed.
Rates of 143 products may increase
The prices of key commodities in India are already facing upward pressures, the GST Council is now reported to have asked for the views of states for increasing rates on 143 items. The products on which GST rates may be raised include handbags, perfumes/deodorants, chocolates, chewing gums, apparel & clothing accessories of leather, and walnuts, and many others.