With the expansion of cryptocurrencies, people are coming on board with the concept. Different regions of the globe are eyeing potential possibilities of making it big in the market. Most importantly, the developing world is hoping to strengthen its economic infrastructure with the use of crypto. The Indian region has also stayed active in relation to the crypto market lately. However, Indian officials have mixed opinions on the use of crypto in the country.
Recently, the Indian Government is moving to classify cryptocurrencies as services and goods under the GST (Goods and Services Tax) law of the country. By classifying crypto as goods, the GST tax will be applicable to the entire value of transactions. As of now, 18% GST is imposed on the services that are offered by cryptocurrency exchanges. Also, this is marked as financial services in the Indian market.
Indian GST officials relate crypto to gambling and betting
Besides proposing a new form of taxes on crypto, Indian officials have tried to find a connection between crypto and gambling. These officers believe that crypto is similar to lottery, gambling, casinos, betting, and horse racing in its true essence. All of these have a 28% GST under Indian law. Moreover, a 3% GST is also applicable on the entire transaction if the value is in gold.
The Indian officials believe that there is no clarity over the classification of cryptocurrencies in the economic sector. Once it is classified properly, then it can be easier to decide that the GST has to be applied only to cryptocurrencies or to the entire transaction value. Nonetheless, if the GST is applied on the complete crypto transaction, then it could vary from the range of 0.1-1%.
However, these discussions will be held after the classification of cryptocurrencies. The GST law is not clear on the status of cryptocurrencies, therefore, the legal framework has to come into force for this. They can classify crypto as goods and services or as an actionable claim. An actionable claim is usually linked with debts of several types.
Recently, the Indian Government proposed a 30% tax on crypto gains and other such transactions. These transactions will be dealt with in the same way as the winnings of a horse race. The tax will be applicable from April 1, as it was a part of the 2022-23 budget. The budget also announced 1% TDS on crypto payments beyond Rs 10,000. Nonetheless, the Indian Government is clearly showing its interest in the crypto world with these developments.
