GST council will not impose 28% of the Goods and Service tax on crypto services, as confirmed by the sources at the Finance Ministry. According to the Finance Ministry, “Crypto services will not be treated as same as online gaming”.
Reports also claimed that the services such as crypto mining, sales and purchases would be subjected to GST of 28 per cent. The recent union budget has slapped a GST of 30 per cent on all crypto gains including one per cent of TDS which is tax deducted at source. Because of this increment in the GST rates, there’s a steep drop in trading volumes across all KYC compliant cryptocurrency exchanges across the country.
KYC compliant exchanges have also come under the scrutinisation of NPCI, the national payments council of India which regulates the payment settlements throughout the country. The regulator of the NPCI officially releases a statement that it is not aware of any Indian exchange who are allowing customers to buy cryptocurrencies via the UPI payment method. This happened after the recent launch of the coinbase exchange.
After this statement of NPCI, UPI was withdrawn from all exchanges throughout the country. According to the executive director of Indirect Tax, NEXDIGM which is a leading professional consultancy that deals with taxes, investments in digital assets would boom if cryptocurrency would not be subjected to GST.
He also said that this is a welcome move for boosting the market and financial services because it will further welcome the potential investors and other entrants that will eventually lead the financial market to rise.
However, this transaction related to cryptocurrency is already subjected to direct tax as same as gambling and lottery. This move since ambiguous in nature can invite people to interpret different things. The government needs to clear their stance and position on this topic as soon as possible