Cryptocurrencies currently face taxation of 30 percent on all gains in India. Starting July 1, a Tax Deducted at Source (TDS) of 1 percent will be levied as well. Media reports have also suggested that on top of all that, a Goods and Services Tax (GST) of 28 percent could be imposed on crypto transactions soon. While the GST Council hasn’t made an official announcement yet, fresh reports have suggested that the GST panel is unlikely to take a decision on taxing cryptos when it meets on June 28 and June 29 in Chandigarh.
As per a report by Bloomberg, the GST Council will be discussing if cryptocurrency should be placed in the highest tax slab of 28 percent when it meets later this month. However, the panel may not be taking a final call on the rates during the meeting.
A separate report by Business Standard suggests that the GST Council may ask the states of Haryana and Karnataka to study the nature of various crypto activities first. The committee, comprising officials representing both the Centre and states, has reportedly decided to defer the decision as it believes crypto taxation requires a deeper study.
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In India, cryptocurrencies are clubbed under Virtual Digital Assets (VDA). As per the new tax regime that went into effect on April 1, all gains from the sale of VDAs will face a tax of 30 percent. It should be noted that there are no thresholds under which the VDA tax won’t be imposed. This means that even if a taxpayer’s total income is below the threshold limit of Rs 2.5 lakhs, the gains will be taxable.
On top of that, a TDS of 1 percent will also be imposed on VDA transfers starting July 1.
ALSO SEE: Onus Of Deducting TDS Primarily Rests On Cryptocurrency Exchanges: CBDT FAQ
The Central Board of Direct Taxes (CBDT) has issued an FAQ detailing the various guidelines on TDS on crypto transactions. The crypto industry welcomes the move, saying that this would help clarify things better, helping both traders and buyers along the way.
Sathvik Vishwanath, CEO and Co-Founder of crypto exchange Unocoin, told ABP Live, “I would consider this to be a small win for the crypto community and we look forward for such encouragements from other departments as well.”
Edul Patel, CEO and Co-Founder of crypto trading platform Mudrex also showed his support. He told ABP Live, “The new clarification from the Finance Ministry on CBDT guidelines would ease the work at their front as the exchanges would be doing it for them.”
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.