- The crypto industry has already been buckling under income tax and TDS.
- Trading volumes in India fell in April, right after the current set of taxes were brought into practice.
- Politicians have asked for crypto to be treated under the same norms as lotteries and gambling.
The crypto industry’s tax woes in India may get worse as the government looks to expand indirect taxes on the space in the coming days. According to reports from local media, the country is formulating methods to expand the ambit of these indirect taxes, specifically the goods and services tax (GST), to cover a larger section of the crypto space.
The GST is an indirect tax that replaced many others in the country a year or two ago. It is levied on the supply of goods and services, including things like restaurant bills, e-commerce orders, and others. Some politicians have demanded the highest GST slab, which is levied at 28%, on the crypto industry.
Tough times ahead
According to a
report by the Hindustan Times, the tax proposals are to be analysed by the requisite law committees, which will recommend their views to the GST Council, which regulates matters related to this particular tax. It is chaired by the country’s finance minister, along with finance ministers of states.
The 28% GST is usually reserved for luxury goods and others that aren’t considered to be essential items. For instance, it is applied to gambling and lotteries, which is what parliamentarians in the country are likening crypto to when demanding this tax.
“Several MPs (members of Parliament) demanded to raise the GST on cryptocurrencies to 28% like gambling and lotteries. As Parliament is an apex body, their demands will also be examined by the law committee,” the report quoted sources as saying.
Taxing times for crypto
The GST is said to be in addition to the 30% income tax on earnings from virtual digital asset (VDA) transactions that the government announced during the Union Budget in February this year. It followed this up with a 1% tax deduction at source (TDS), which is levied on salaries and other incomes, of those selling cryptocurrencies.
The two taxes together have already discouraged many users from crypto trading, and an addition of 28% GST might make things worse. Not only that, but
crypto exchanges in the country may also struggle to keep track of all the taxes that are to be levied on such transactions, as will the users.
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