India Places Crypto Like BTC on Par With Lotteries, Mulls 28% GST

Key Insights:

• India to impose 28% GST on cryptocurrencies.
• Cryptocurrencies such as BTC, ETH, are considered akin to a lottery, casinos, gambling, and horse racing.
• GST Councill appoints a law committee to decide on the tax proposal.

The Indian government, after imposing a 30% crypto tax and 1% tax-deductible at source (TDS), is now working to bring them under the goods and service tax (GST) ambit.

The government is working on classifying cryptocurrencies such as bitcoin (BTC) and ethereum (ETH) under the 28% tax slab products, including lotteries, casinos, and gambling.

GST on crypto soon

Per government sources, the GST Council, the country’s tax decision-making body, has nominated a law committee, which will decide on the tax proposal. The committee’s views will be put forth before the council for formal approval.

Official sources told CNBC that the creation of a law committee and all other backend work on the proposal have started well ahead of the council’s next meeting, which is yet to be fixed. They noted:

“There are various aspects of cryptocurrencies – the transactions involving cryptos, cryptos being used to make purchases, cryptos being received as payments. All these aspects are under examination and will be discussed by the law committee.”

The law committee on GST comprises of 23 bureaucrats that represent indirect tax matters from the center and states. Per another local media report, the move arrives after several members of parliament (MPs) demanded to raise GST on cryptocurrencies to 28% like gambling and lotteries.

At present, crypto exchanges are subject to an 18% GST slab on services provided to users under the financial services category. Additionally, online gambling without betting attracts 18%, while all other activities such as casinos, betting, horse racing are levied at 28% GST.

India faces a crypto-tax year

It all started in February when the Indian Finance Minister Nirmala Sitharaman declared a 30% tax on all crypto income accompanied by a 1% TDS on every transaction. The country’s crypto community saw this as a step closer to legalization.

However, the cryptocurrencies’ legal tender speculation was squashed by the country’s Finance Secretary, T. V. Somanathan. He assured that no private cryptocurrency like bitcoin and ether, along with the trending tokenized goods, namely non-fungible tokens (NFTs) will ever attain legal status in India.

Speaking to ANI news, he said a digital rupee or a central bank digital currency (CBDC) issued by the Reserve Bank of India (RBI) would only become a legal tender. He added:

“The digital rupee issued by RBI will be the legal tender. Rest all are not legal tender, will not, will never become legal tender. Bitcoin, Ethereum, or any picture of actor become NFT will never become a legal tender.”