The crypto industry’s tax problems in India may worsen in the coming days as the government considers expanding indirect taxes on the sector. According to the sources, the nation is working on ways to broaden the scope of these indirect taxes, particularly the goods and services tax (GST), to include more of the crypto area. As per the sources, crypto investments are classified alongside lotteries, casinos, racetracks, and betting by India’s Goods and Service Tax (GST) council. On May 9, some ministers proposed that the crypto business be subjected to the highest GST rate of 28%.
According to the proposal:
“(Crypto exchanges) sell cryptos from foreign exchanges to people in India. So, this is a service, and currently, this is at 18% GST slab and classified as intermediary service. Post the discussion at the law committee, this service is likely to be classified under a different head, under the list of services, where it could attract 28% GST if agreed upon by the law committee, fitment committee, and the GST Council.”
Indian crypto community is in for a rough patch
As reported by CryptoShrypto, India is trying to expand its crypto taxes to cover income from decentralised finance (DeFi) operations. The Central Board of Direct Taxes (CBDT) of India has been consulting experts on how to implement this.
The GST is claimed to be in addition to the government’s announcement in February of a 30% income tax on revenues from virtual digital asset (VDA) transactions in the Union Budget. Loss deductions are not allowed under this regulation, hence all dealers will be disadvantaged. It then added a 1% tax deduction at source (TDS) for people selling cryptocurrency, which is imposed on salaries and other revenues.
Many users have already been turned off by the two fees combined, and the inclusion of a 28% GST might increase the problems. Not only that, but crypto exchanges and users in the country may find it difficult to keep track of all the taxes levied on such transactions.
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