28% GST on crypto transactions? India is reportedly mulling another tax levy next week

• A group of ministers is reportedly set to discuss a GST on cryptocurrency transactions in the country.
• Decisions on GST are taken by the GST Council.
• India levies 5%, 12%, 18% and 28% GST on goods and services sold in the country.

After levying a 30% tax on capital gains from crypto transactions, and the upcoming 1% tax deduction at source (TDS), the Indian government may now be looking to levy its goods and services tax (GST) on such transactions as well.

A ministerial panel is expected to meet next week to discuss the tax, according to a report by Bloomberg. The panel will comprise of finance ministers from central and state governments in the country, also known as the group of ministers (GoM). It will meet on two days, starting from June 28, in the Northern Indian state of Chandigarh.

To be sure, the panel won’t be finalizing the tax during the meeting. Under Indian law, ministerial panels like this are formed in order to make recommendations to the GST Council, which takes final calls on this particular tax. For instance, earlier this month, a panel of ministers recommended that a 28% GST should be issued on online fantasy games — a decision that is pending with the council right now.

28% GST on crypto transactions?

India levies 5%, 12%, 18% and 28% GST on goods and services sold by companies in the country. The 28% slab is reserved for goods and services that are considered to be in the luxury segment. India also puts gambling under this slab, and is set to add fantasy gaming to it, raising concerns that crypto may be subject to the same tax.

The tax was formulated long ago, but came into effect from 2017, and is meant to bring many of the country’s service-related taxes, including service tax and value added tax (VAT), under one umbrella.

An additional tax on the industry, however, could be troublesome for crypto exchanges and traders in the country. In February this year, Finance Minister Nirmala Sitharaman announced a 30% tax on capital gains from cryptocurrency transactions in the country, during the Union Budget announcement.

India’s tax authorities clarify on crypto TDS

The country is also expected to levy a 1% TDS on such transactions from July 1, and the Central Board of Direct Taxes (CBDT) issued clarifications on the same yesterday.

The taxes come at a time when the crypto industry is experiencing an extended bear phase. At the time of writing, top coins like Bitcoin, Ethereum, Cardano and others have dropped by over 70% from their all-time-highs. Additional taxes could affect the industry’s fortunes and impact exchanges’ trading volumes.

SEE ALSO:
Tether to launch tokens pegged to the British pound in an expansion of its lineup of stablecoins
FTX boss Sam Bankman-Fried has bailed out struggling crypto lender BlockFi with a $250 million loan