Local media reported that the Government of India is working to classify cryptocurrencies as a good or service under GST law so that they can be taxed on the full value of the transaction.
Government officials believe that cryptocurrency trading is similar to gambling and lottery, with a goods and services tax (GST) of 28%.
An official said :
“There is a clarity needed regarding levy of GST on cryptocurrencies and whether it has to be levied on the entire value. We are seeing whether cryptocurrencies can be classified as goods or services and also removing any doubt on whether it can be called an actionable claim.”
Currently, cryptocurrency is classified as a financial service in India and an 18% GST is levied on transactions on exchanges.
During her February budget speech, Finance Minister Nirmala Sitharaman announced plans to levy a 30% tax on crypto income as well as a 1% withholding tax at source (TDS) on each transaction Translated.
Since then, the Reserve Bank of India and the central bank have warned against crypto exchanges, with the deputy governor even suggesting a total ban.
Naimish Sanghvi, Founder of Coincrunchin also commented on the event on his twitter:
“I’m going to take a limb and say that India has no idea how to regulate crypto. Everyone is simply giving their own version of the story.”
According to a survey by StatistaCharts, India, South Korea, the United States, and Germany are the countries where the number of crypto users and owners has increased significantly between 2019 and 2021. In India, The number of people “investing” in crypto has more than doubled from 7% to 18%. This could also be the reason why the country’s government is having clearer laws for cryptocurrencies.
Just a few months ago, Nirmala Sitharaman, Finance Minister of India, announced that the Reserve Bank of India (RBI) will issue a central bank digital currency (CBDC) for the financial year 2022-2023.