Cryptocurrency
Govt working on categorisation of cryptocurrency under GST law: Report
The cryptocurrency may soon be categorised as goods or services under the GST law as the government is working on it to levie tax on the entire value of transactions, media reports said.
At present, an 18 per cent Goods and Services Tax (GST) is levied on services offered by crypto exchanges and is classified as financial services.
The government is of the view that the money earned through crypto is similar to lottery, casinos, betting, gambling, horse racing, which attarct 28 percent GST on entire value.
"There is a clarity needed in regard to levy of GST on cryptocurrencies and whether it has to be levied on the entire value, We are seeing whether cryptocurrencies can be classified as goods or services and also removing any doubt on whether it can be called an actionable claim," an official was quoted as saying by news agency PTI.
Another official said, "Discussions are in a nascent stage on the rate of tax, whether it would be 0.1 per cent or 1 per cent. First a decision on classification will have to be finalised and then rate will be discussed."
The Goods and Services Tax (GST) law does not clearly state about classification of cryptocurrency.
From April 1, a 30 per cent I-T plus cess and surcharges, will be levied on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.
The Budget 2022-23 also proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient.
The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.
The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.
Separately, the government is working on framing laws to regulate cryptocurrencies, but no draft has yet been released publicly.
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