The Goods and Services Tax Council of India (GSTC) plans to tax cryptocurrencies at 28% in an upcoming meeting. However, this tax proposal does not hint at a way to regulate cryptocurrencies for the country. Quite the contrary.
Higher taxation of cryptocurrency-related activities
The Goods and Services Tax Council of India (GSTC) is expected to consider levying a 28% Goods and Services Tax on cryptocurrencies.
The GSTC is the main decision-making body for indirect taxes. Therefore, this report will have to be submitted for approval at a future meeting.
In this context, the government’s objective would be to tax cryptocurrencies at the same level as lotteries, casinos, or betting.
It is important to stress that this “tax” proposal does not suggest a way to regulate cryptocurrencies. Quite the contrary.
According to Finance Minister Nirmal Sitharaman, taxing cryptocurrencies does not make them legitimate. Moreover, according to a source close to the matter:
” The proposal is to soon levy a 28% tax on services and all activities related to cryptocurrencies. The opinion of the Law Commission will be presented to the Adjustment Commission, it will then be up to the Adjustment Commission to suggest a rate, which will probably be 28%, and after that, the proposal will be presented to the GST Council for a formal agreement. “
The legal framework remains unclear
Other than this new tax on top of cryptocurrency-related activities, India taxes investors at 30% on their income.
Also, even though the country is implementing taxes for this ecosystem, the legal framework for digital assets is still not very clear. In this sense, political scientist Meenakshi Jain said:
“The other issue that needs to be addressed is clarity regarding the classification of cryptocurrencies and the method by which tax collection for this industry would be administered. If these issues are not resolved, it may not be wise to set a higher tax rate by treating this industry in the same way as lotteries or betting. “
So, India still remains hesitant on how to regulate cryptocurrencies and many questions still remain.
