It seems the world countries are trying to exploit the demand for cryptocurrencies moving away from their previous hostile curbing attitude. While quick regulations on digital assets are underway, India’s Goods Service Tax Council suggested a 28% GST on crypto-based services. Should the bill be passed, crypto betting, casinos, and exchanges would receive a huge blow on their revenue, and so do the users.
The year 2022 has been much stricter on cryptocurrency transactions in India. The Union Budget of India, which was submitted a few months ago, mentioned several policies regarding virtual currencies, including the 30% income tax on all crypto earnings. Now, the country will bring all crypto-based services under its clench with the new GST policy for virtual assets.
As per the reports, the Indian government views cryptocurrencies on par with Lotteries, Gambling, Racing, and Betting. So, the GST Council has elected a committee to investigate crypto services and activities to formulate a proposal for the GST framework. The committee’s proposal would later be submitted to the GST Council for a proper inspection and formal approval.
The committee will investigate various facets of cryptocurrency transactions, like payments, purchases, gifts, and others. The committee will consider the nature of the transaction and impose GST on what seems eligible. The proposal will likely reach the table by the next GST Council meeting. Yet, there has been no official date as of now.
As per the justifications given, the crypto exchanges in India act as intermediaries to bring assets from foreign exchanges. Crypto exchange is seen as a foreign exchange service, and the current GST for this service stands at 18%. The new committee will draw the framework to put these services under a different classification with 28% GST.
Earlier, the Union Budget for 2022-2023 asked for a 30% income tax with cess and surcharges, which came to effect on the 1st of April. Not only that, but the budget also asked for a 1% TDS on crypto transactions over 10,000 in a year, and this limit was increased to 50,000 for individual coke under the I-T Act.
With the handsome income tax and TDS, crypto users also have to deal with the 28% GST. That, however, is not all, as users also pay a fraction of their holdings to crypto exchanges to process payments.
Online casinos and betting platforms will also receive the same treatment from the GST Council. While traditional gaming platforms currently without betting receive only 18% GST, online gambling and betting ask for an extra 10%. Whether the tax would be levied from the gross or the net would be decided after further discussion on this one.