Ministry of Finance Working on Crypto Classification under GST
The Ministry of Finance is reportedly working on how to apply
the Goods and Services Tax (GST) on crypto transactions. "A better
understanding of how cryptocurrencies fit into our legal system is the
prerequisite for the decision on the GST rate," a source told the media.
Goods and Services Tax (GST) on Crypto Transactions
The Finance Ministry of India is reportedly working on a
comprehensive Goods and Services Tax (GST) regime, Livemint reported on Monday.
A source told the publication:
"We are still discussing the applicability of GST in the
case of crypto assets. Right now, it is levied on services, so we need to see
if crypto assets are declared as a good or service."
The media has earlier reported that the government is
considering imposing either an 18% or
a 28% GST on
crypto assets.
However, the source was quoted as saying: "We can have a
special rate for it. It may not necessarily be 18% or 28%, but maybe somewhere
in between. We have had a few discussions on it and will arrive at a decision
soon."
Another source explained the news publication:
"A better understanding of how cryptocurrencies fit into
our legal system is the prerequisite for the decision on the GST rate."
The GST will only be applicable on the margin or service fees,
and not on the entire value of the asset, the publication conveyed, adding that
the government is also examining the treatment of certain transactions, like
mining or airdropped crypto tokens.
An Indian ministerial panel reportedly met at the end of June to
discuss the GST tax on crypto transactions. However, the officials did not
share the details of the meeting with the media.
The government of India has already started taxing crypto income
and transactions. A 30% tax on gains from crypto assets has been effective
since April 1. Additionally, the 1% tax deducted at source (TDS) on crypto
transactions has been applicable as of July 1.
Meanwhile, the Indian government is also working on the crypto policy. To become Financial Action Task Force (FATF)
compliant, the government plans to finalize its position on the legality of cryptocurrencies by early next year. The Finance Minister of
India, Nirmala Sitharaman, has also urged the International Monetary Fund (IMF)
to take a lead role in developing a global framework for
cryptocurrency.
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