No Proposal to levy 28% GST on crypto services- Sources say
There has been quite a lot of speculation about slapping the highest GST rates on crypto transactions by the Government. Several media sources recently reported that the GST council might impose 28% GST on crypto transactions similar to the present GST on online gaming, casinos, betting, and lottery. Those reports also claimed that services like crypto mining, as well as sales and purchases, would be subjected to the 28% GST. However contrary to several media reports, the sources at the Finance Ministry told Business Today that the GST Council is not going to impose 28% GST on crypto services.
“No proposal of 28% GST on crypto services. Crypto services will not be treated at par with online gaming”, the source told Business Today.
It is also a notable fact that Budget 2022 has imposed a flat 30% tax on all crypto gains. It is important to note that no set-off of losses (even other crypto category losses) shall be allowed while calculating the tax on crypto gains. Further, one percent TDS has also been imposed on consideration of the transfer of crypto assets. These steps resulted in a steep fall in trading columns across all KYC compliant cryptocurrency exchanges in the country.
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The above reports from unnamed sources might bring a sigh of relief for those in the crypto segment either as intermediaries or as a trader. But it is too hurry to reach a final conclusion and we should wait for the decisions taken by the GST Council. However, it is very clear that the Government is in no mood to leave the crypto industry and is going to regulate it heavily. This is also evident from the large number of Section 148A notices issued to crypto traders in March 2022.
It is highly advisable for those crypto traders who have done massive trades in cryptos to get prepared proper accounting records for their crypto transactions so that these might be produced before IT authorities as and when asked for verification. Having accounting of crypto transactions done is otherwise also very important to keep track of gains or losses derived on crypto trades along with proper control over crypto inventory.
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