The Indian government is working to introduce a Goods and Services (GST) tax on cryptocurrency transactions as an investigation is underway to determine the legality of the sector, according to information on Sept. 19. Live mint report.
Introduction of GST tax
GST tax will be an indirect tax regime for crypto assets and will serve as a check for loss of revenue to the State Treasury due to lack of clarity about assets.
The tax rate could drop between 18% and 28%, according to the report.
At this stage, the Indian Ministry of Finance is working to determine the applicability of GST to crypto-assets and whether they will be declared as goods or services as purchases are charged on services. has not yet been determined, Livemint’s two sources, who wished to remain anonymous, reported.
WazirX vice president Rajgopal Menon said, based on the details available at this time, “GST only applies to margin or service fees and not to the total value of assets.”
Also note that the government is also looking to process certain transactions such as mining and airdropped crypto tokens.
Crypto legality faces uncertainty in India
Meanwhile, the Indian government is finalizing its stance on the legitimacy of cryptocurrencies to submit a response to the Financial Action Task Force (FATF) “Mutual Evaluation” sometime in February-March 2023. .
India is not currently FATF compliant. The FATF requires countries to take a clear stance on legalizing, partially banning, or completely banning crypto assets.
The Department of Economic Affairs announced that it is preparing a consultative paper on Virtual Digital Assets (VDA) to assess the legality of VDAs. The consultation process began on September 17th.
The Financial Stability and Development Council (FSDC), chaired by India’s Finance Minister Nirmala Sitharaman, discussed the need to clarify the VDA situation in India and delivered a message to accelerate the initiative.
Sitharaman also called on the International Monetary Fund (IMF) to lead the development of a cryptocurrency regulatory framework to ensure a globally unified approach to the sector.
Early crypto regulation in India
On July 1st, the 1% tax deductible (TDS) rule for cryptocurrency transactions went into effect. TDS mandates Indian citizens engaged in the sale of crypto assets such as Bitcoin, Ether, Tether, BNB, Shiba Inu, Solana to deduct 1% of profits as income tax payable to India’s Income Tax Authority I’m here.
In the 2022-2023 Federal Budget made in February, the Indian government defined cryptocurrencies as VDAs. Cryptocurrency status is not balanced.