The GST Council which is the highest decision-making body on indirect taxes in India, during its next meeting, is reportedly going to consider levying a 28% goods and services tax on cryptocurrencies, according to sources. The government’s opinion is that cryptocurrencies should be kept at par with lotteries, casinos, racecourses, and betting.
A GST Council-nominated law committee’s view will be tabled before the GST Council for formal approval, and will take up the proposal to charge 28% GST on services and all activities in relation with cryptocurrencies soon, according to the sources.
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
In the Union Budget 2022, Finance Minister Nirmala Sitharaman announced a 30% tax on gains on cryptocurrencies and assets. No deduction is going to be allowed, except the cost of acquisition, and no loss in transaction is going to be allowed to set off 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
Currently, the legal position of cryptocurrencies, like Bitcoin, is also unclear as there are no laws in the country to regulate cryptocurrency. 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. 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.