Govt. of India eyes crypto classification subject to GST law

Govt. of India eyes crypto classification subject to GST law

GST officers believe cryptos are like lottery, betting, or gambling which are subject to 28% GST on the total amount

The Government of India is working towards the classification of crypto as goods or services under the GST law, aiming to impose a tax on the entire transaction value.

At present, services provided by crypto exchanges comply with an 18% Goods and Services Tax (GST), which is categorized under financial services.

However, GST officers have a different perspective to add – that in terms of nature, cryptos are much like lottery, gambling, horse racing, betting or casinos which are levied with 28% GST on the entire value.

Moreover, a 3% GST is applied on the total transaction value if the type of exchange is in gold.

India awaits more clarity on the GST framework for cryptocurrencies and officials are still determining whether a tax is to be levied on the entire value.

Authoritative agencies are assessing whether cryptocurrencies fall under goods or services categories and are currently eliminating doubts associated with actionable claim.

Speculations have it that the finalization of rate of tax to determine whether it would by 1% or 0.1% is under works as the primary focus is on classification.

Since the GST law does not explicitly explain the classification of cryptocurrency, the lack of a regulatory framework on virtual digital currencies is necessitating for classification in consideration of whether the legal guidelines recognize it as actionable claim.

Imperative to note that an actionable claim is a case typically made by a creditor for any form of debt excluding the one secured via mortgage of an immovable property.

As per the 2022-23 Budget - which shed light on the income tax levied on crypto assets - starting from April 1, a 30% I-T plus cess and surcharges will be applied on transactions similar to that of how it acknowledges lotteries or other treat winnings and speculative transactions.

Source Credit: https://www.businessinsider.in/investment/news/india-is-working-on-crypto-classification-under-gst-law/articleshow/90344895.cms