Lagatar24 Desk
New Delhi, Mar 20: The government is working to define cryptocurrencies as a good or service under the GST statute, allowing for taxation on the entire transaction value.
As of now, only 18% of the Goods and Services Tax (GST) is levied on services supplied by crypto exchanges, which are classified as financial services.
Cryptos, according to GST officials, are similar to lottery, casinos, betting, gambling, and horse racing in that they are taxed at a rate of 28% on the total value. Furthermore, in the event of gold, a 3% GST is paid on the whole transaction amount.
“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,” an official said, according to PTI.
According to another official, if the GST is imposed on all cryptocurrency transactions, the rate might range from 0.1 to 1%.
“Discussions are in a nascent stage on the rate of tax, whether it would be 0.1 percent or 1 percent. First, a classification decision will have to be finalised, and the rate will be discussed,” the official told PTI.
The classification of cryptocurrencies is not explicitly stated in the Goods and Services Tax (GST) statute. In the absence of legislation governing virtual digital currency, the categorization must assess whether the legal framework characterises it as a claim that can be pursued.
The levy of income tax on crypto assets has been explained in the 2022-23 Budget. From April 1, such transactions will be subject to a 30% I-T, plus cess and surcharges, in the same way that profits from horse racing or other speculative trades are.
Although the government is working on laws to regulate cryptocurrencies, no draft has been made public.
