Indian officials are expected to explore imposing a 28% goods and services tax on cryptocurrencies at the upcoming GST Council meeting.
The goods and services tax (GST) Council, which is India’s top decision-making body on indirect taxes, is set to discuss the future of indirect taxes, according to a report by CNBC-TV18.
As per sources, a legal committee appointed by the GST Council, whose proposal would be presented to the GST Council for official approval, will take up the idea of charging a 28% GST on services and other activities linked to cryptocurrencies as soon as possible.
The motion is expected to be introduced at the next GST Council meeting, the date of which has not yet been determined.
A 30% tax on earnings from cryptocurrencies and other assets was proposed in the Union Budget 2022 by Finance Minister Nirmala Sitharaman. Except for the cost of purchase, no deductions will be permitted, and no losses in transactions will be allowed to be used to offset the profits. The Income Tax Act of 1961 has been amended to include a new Section 115BBH that applies to virtual digital assets.
The legal status of crypto is still ambiguous
The legal status of cryptocurrencies like Bitcoin is still unclear due to a lack of legislation in the nation. Investors argued the Union Budget tax plan on cryptocurrencies essentially legalized crypto trading. Taxing crypto does not make them legitimate, according to Finance Minister Nirmala Sitharaman. The issue is currently under review.
Elsewhere, despite rising costs for major commodities in India, the GST Council is currently seeking state input on raising rates on 143 items. As per sources, the GST Council may potentially propose eliminating the 5% slab by transferring certain mass-market products to 3% and the rest to 8%.
Reports said it also wants to hike the GST over the next two years and minimize the number of slabs. As a result, the government may collect more taxes and cut inflation, which has reached a 17-month high.
Due to higher compliance and speedier economic recovery, GST receipts increased to Rs 1,67,540 crore in April. There was 1,42,095 crore in March, which was 25,000 crores higher.