India considers imposing 28% tax on all crypto transactions

The Indian government is reportedly considering imposing a goods and services tax (GST) of 28% on all cryptocurrency transactions.

As reported by CNBC TV18 on May 10, the Goods and Services Tax (GST) Board of India will soon make a decision on extending the current coverage and levying a 28% GST on the entire Cryptocurrency transaction value.

The ways listed include buying and selling tokens on exchanges, holding these assets in centralized and decentralized wallets, and participating in staking on different platforms.

Cryptocurrencies may soon attract 28% GST. This will be in addition to the 30% Income tax pic.twitter.com/qQP8jEQdrx

— Sashi Wapang (@sashiwapang) May 10, 2022

If passed, the new tax will increase the overall tax burden for the crypto industry in India. The proposal comes a month after India’s finance ministry started imposing a 30% tax on all personal income generated from cryptocurrencies, the main cause of the drop in trading volume in the country. “. Furthermore, a 1% tax withheld at source (TDS) will also be introduced in early July.

GST is an indirect tax paid on all goods and services in the country, regulated by the GST Council. Commenting on the state of the Indian government’s high probability of adopting the new GST regime, Saket Patawari, Managing Director at tax consulting firm Nexdigm, said:

“Currently the tax is levied on only a portion of the service provided by crypto exchanges, at 18%. Taxing the entire transaction at a rate higher than 28% could send the market into free fall.”

According to the report, the goal of the proposal is to bring the crypto-specific GST in line with the recommended tax rates for the online gambling and betting model in India. Meanwhile, the Indian government is intensifying its work on the country’s crypto policy in consultation with the International Monetary Fund (IMF) and the World Bank.

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