The government is working on a comprehensive indirect tax regime for crypto assets that will review revenue losses for the treasury due to the uncertain nature of these assets, reported live mint on Monday.
The Ministry of Finance led by Nirmala Siharam plans to define the characteristics of cryptocurrencies, their uses and how they fit into the existing legal framework, people aware of the development said live mint. The ministry, after deciding its legal nature, will set the GST rate for cryptocurrencies, as it might be in a new GST disk set, between 18 percent and 28 percent, he reported live mintstating its sources.
“We’re still debating the applicability of GST in the case of crypto assets… right now it’s being levied on services… so we need to see if crypto assets are declared as goods or services. We can have a special price for it. It doesn’t necessarily have to be 18 percent or 28 percent. Maybe somewhere in between. We’ve had some discussions about this and will come to a decision soon,” one of the 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 a prerequisite for deciding on the GST rate,” the second person told the newspaper.
This comes amid heated debates over crypto assets in India, as the Reserve Bank of India said they pose a threat to the country’s financial stability. On the other hand, the central government is in contact with multilateral agencies and the Bank for International Settlements to reach a consensus on regulating such assets, Livemint reported.
GST is only charged on margin or service fees and not on the full value of the asset. The government is also examining the treatment of certain transactions such as mining or airdropped crypto tokens.
The center previously announced a 30 percent tax on crypto asset income effective April 1, 2022 and 1 percent TDS on payment of virtual assets in excess of Rs 10,000 per year and taxation of such gifts in the hands of recipients from July 1.
Dear Reader,
Business Standard has endeavored to provide timely information and commentary on developments that are of interest to you and have broader political and economic implications for the country and the world. Your encouragement and constant feedback to improve what we offer has only strengthened our resolve and commitment to these ideals. Even during these trying times resulting from Covid-19, we remain committed to keeping you informed and informed with credible news, authoritative views and incisive commentary on timely and relevant issues.
However, we have a request.
As we fight the economic impact of the pandemic, we need your support even more so that we can continue to bring you higher quality content. Our subscription model has had an encouraging response from many of you who have subscribed to our online content. More subscriptions to our online content can only help us achieve our goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are dedicated to.
Support quality journalism and Subscribe to Business Standard.
digital editor
