The Goods and Services Tax (GST) Council is waiting for the Finance Ministry to decide whether to declare crypto assets as goods or services before creating a comprehensive indirect tax regime for the asset class. According to a recent report citing sources close to government proceedings, the finance ministry is currently working on breaking down the technical specifications of cryptocurrencies before deciding whether a unique GST slab for digital assets can be agreed upon. The government’s purported intention is to ensure that the dubious nature of crypto-assets does not drain government exchequer of revenue.
According to Report of the Mint, citing two sources close to the matter, the new GST slab, between 18 percent and 28 percent, could be allocated to crypto assets. The finance ministry is working on defining the characteristics of cryptocurrencies and digital assets within the country’s existing legal framework before deciding the new GST rates.
“We are still discussing the implementation of GST on crypto assets… At present, it is levied on services… So we have to see whether crypto assets are declared as good or services. We may have a special rate for this. It is not necessary. . Could be 18 per cent or 28 per cent. Maybe somewhere in between. We have had some discussions on this and will take a decision soon,” a source told the publication.
The issue of crypto taxation has been heated so far by the country’s GST Council. In May 2022, several reports suggested that the council was planning to club crypto activities with speculative activities such as gambling, lotteries, betting and horse racing – which would increase the GST levied on cryptocurrencies to 28 percent. At that time, the council also formed a committee to study and map various crypto activities such as trading, staking and wallets for tax purposes.
As of now, crypto exchanges are charged 18 percent GST and are considered intermediaries providing financial services.
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