• Notification Date: 13-05-2022
  • Notification No: N/A

GST Council Decides Not To Impose 28 Per Cent GST On Crypto Currencies

The media had previously reported that the GST Council is considering the imposition of 28 per cent GST rate on crypto currencies. But according to the statement made by the sources of the Finance Ministry to Business Today, the GST Council is not going to impose 28 per cent GST on crypto services. The sources clarified that crypto services will not be treated equally at par with online gaming, discarding the popular reports of several other media sources who claimed that the GST Council is planning to impose 28 per cent tax on crypto currency at the same rate as online gaming, casinos, betting, and lottery.

The media sources had also previously reported that the services that crypto mining, as well as the sales and purchases of crypto assets would be charged with 28 per cent of GST. The Union Budget has recently imposed 30 per cent rate of GST on all types of crypto gains, including the transactions of crypto assets and gifts, along with the imposition of one per cent TDS (tax deducted at source). This decision taken by the Council has led to an exponential fall in the trading volumes across all the exchanges of crypto currency, which were compliant with KYC, all over the country. The crypto exchanges that were compliant with KYC have been a matter of discussion and it came under heat from the NPCI. According to the statement of the regulator, the KYC compliant exchanges are not at all aware of any of the Indian exchanges. It is allowing the customers to make online purchase of crypto currencies through UPI payments since the public launch of Coinbase exchange in India.

After the statement made by the NPCI, UPI payments have been withdrawn from all the exchanges that are being operated in India. Fintech Giant Mobikwik also has withdrawn its services that were available in KYC compliant Indian crypto exchanges. The Executive Director of Indirect Tax at NEXDIGM, Saket Patwari has stated to Business Today that crypto currency must not be subjected to tax. This would help to boost up the investments made in digital assets. This decision would help to enhance the financial service segment. It will be effective in attracting more entrants and investments and enable the markets to prosper. The transaction of crypto assets is subjected to direct tax which is more or less similar to lottery, betting, and gambling. This move can promote various interpretations. The departments will litigate it further and the only way to mitigate this issue is to receive a clarification from the side of the government on this matter.