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Preparation to impose 28 percent GST on crypto transactions in India

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HIGHLIGHTS :

  • A proposal in this regard can be presented in the meeting of the GST Council.
  • In this year’s budget, the government announced a tax for the crypto industry.
  • Trading volume on crypto exchanges has dropped drastically due to taxation

Last month, state finance ministers agreed to increase tax rates for horse racing, casinos and online gaming. With this, online games related to gambling and betting will be strictly enforced.

A proposal in this regard can be presented in the meeting of the GST Council.

There may be a major setback for crypto investors in the country. Tax authorities are planning to put crypto activities in the category of services that attract the highest Goods and Services Tax (GST) of 28 per cent. The GST Council has assigned a committee to study various crypto activities like trading, staking and wallets for tax purposes.

A proposal in this regard can be presented in the next meeting of the GST Council. The date of this meeting has not been decided yet. Crypto exchanges currently attract 18 per cent GST and are considered financial intermediaries offering financial services. According to a media report, the GST Council may consider linking crypto transactions with betting activities like gambling, lottery, betting, and horse racing. Sources associated with the GST Council said that a law committee has been formed to suggest the fitmate committee in this regard. The fitmate committee will decide the GST rate on crypto activities.

In this year’s budget, the government announced a tax for the crypto industry.

The proposal of the fitment committee will be sent to the GST Council for final approval. Last month, state finance ministers agreed to increase tax rates for horse racing, casinos and online gaming. With this, online games related to gambling and betting will be strictly enforced. The GST Council may also increase the tax rate on online gaming from 18 percent to 28 percent.

Trading volume on crypto exchanges has dropped drastically due to taxation

If the GST on crypto activities is increased from 18 percent to 28 percent then it will be another big blow to the crypto segment. In this year’s budget, the government announced a tax-related policy for the crypto industry. Under this, 30 percent capital gains tax has been imposed on digital assets and 1 percent TDS has been imposed on their transfer. This has greatly reduced the trading volume on crypto exchanges. Crypto investors will have to add 30 percent tax on profits, 1 percent TDS, and possible GST of 28 percent in addition to exchange fees and additional cess and surcharge. This will make investing in crypto very expensive. This will also have an impact on crypto transactions.

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