Govt working on GST on crypto transactions, defining legal framework

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The gov­ern­ment is work­ing on a com­pre­hen­sive indi­rect tax regime for cryp­to assets, which will check rev­enue loss to the exche­quer due to the uncer­tain nature of these assets, report­ed Livemint on Monday.

Nir­mala Sitharam-led is plan­ning to define the char­ac­ter­is­tics of cryp­tocur­ren­cies, their use, and how they fit into the exist­ing legal frame­work, peo­ple aware of the devel­op­ment told Livemint. The min­istry, after decid­ing its legal nature, will fix the GST rate for cryp­tocur­ren­cies, as it could be in a new GST slab rate, between 18 per cent and 28 per cent, report­ed Livemint, quot­ing its sources. 

“We are still dis­cussing the applic­a­bil­i­ty of in case of cryp­to assets…right now, it is levied on ser­vices… so we need to see if cryp­to assets are declared as a good or ser­vice. We can have a spe­cial rate for it. It may not nec­es­sar­i­ly be 18 per cent or 28 per cent. Maybe some­where between that. We have had a few dis­cus­sions on it and will arrive at a deci­sion soon,” one of the two peo­ple told Livemint.

Also Read: FAQ on tax­a­tion of cryp­tocur­ren­cies, vir­tu­al dig­i­tal assets in works

“A bet­ter under­stand­ing of how cryp­tocur­ren­cies fit into our legal sys­tem is the pre-req­ui­site for the deci­sion on the rate,” the sec­ond per­son told the newspaper.

This comes amid heat­ed debates on cryp­to assets in India as the has said they are a threat to the nation’s finan­cial sta­bil­i­ty. On the oth­er hand, the is in touch with mul­ti­lat­er­al agen­cies and the Bank for Inter­na­tion­al Set­tle­ments to devel­op a con­sen­sus on reg­u­lat­ing such assets, report­ed Livemint.

The will only be applic­a­ble on the mar­gin or ser­vice fees, and not on the entire val­ue of the asset, gov­ern­ment is also exam­in­ing the treat­ment of cer­tain trans­ac­tions like min­ing or ‘air­dropped cryp­to tokens’.

The Cen­tre has ear­li­er announced a 30 per cent tax on income from cryp­to assets with effect from April 1, 2022, and 1 per cent on pay­ment of vir­tu­al assets more than Rs 10,000 in a year and tax­a­tion of such gifts in the hands of recip­i­ents from July 1.

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