No proposal of 28% GST on crypto services by GST Council

Contrary to multiple media reports, the GST council will not levy a 28% GST on crypto services, according to Finance Ministry sources.

“There is no proposal for a 28 percent tax on crypto services.” “Crypto services will not be regulated in the same way as online gambling,” a source told.

Several media outlets have claimed that the GST council is considering imposing a 28% tax on bitcoin, similar to the current GST on online gambling, casinos, betting, and lottery.

According to those sources, services such as crypto mining, as well as sales and purchases, will be subject to the 28% GST.

The latest Union Budget imposed a 30% flat tax on all crypto earnings, plus a 1% TDS. As a result, trading volumes fell precipitously across all KYC-compliant cryptocurrency exchanges in the country.

Furthermore, NPCI has criticised KYC-compliant exchanges. Following Coinbase’s extremely public launch in India, the regulator stated that it is not aware of any Indian exchange allowing its users to acquire cryptocurrencies over UPI.

Following the NPCI‘s announcement, UPI was removed from all Indian exchanges.

Furthermore, Mobikwik, a financial behemoth, removed its services from KYC-compliant Indian crypto exchanges.

According to Saket Patwari, Executive Director, Indirect Tax, NEXDIGM, “not taxing cryptocurrencies would increase investment in this digital asset.” This is a positive step toward growing the financial services sector by drawing new entrants and investments and causing the markets to rise.

However, because the transaction is already subject to direct taxation, it is comparable to lottery, betting, and gambling. This approach may also give rise to different interpretations, leaving the door open for the department to litigate it further. To mitigate this, the government will need to clarify their position in the next FAQ.

Source: LINK