According to a media report, the government is considering taxing cryptocurrencies at par with casinos, lotteries, betting and racecourses, but Aritra Sarkhel, Director for Public Policy at WazirX, said digital assets could not be put under that category.
According to the media report, the Goods and Services Tax Council, which is the top decision-making body on indirect taxes, is considering levying 28 per cent GST on cryptocurrencies, with the GST Council likely to discuss the proposal at its upcoming meeting. The date of the meeting is not yet finalized.
Virtual Digital Assets VDAs are an asset class with varied use cases across industries. Aritra Sarkhel, the Director for Public Policy at WazirX, said the government is considering a 28 per cent GST on cryptocurrencies.
If we look at the current trends, it is evident that the movement in the criptocurrency markets is similar to the other financial markets in the world. He said the recent US Federal Reserve's announcement of increasing rates was followed by a market dip.
Finance Minister Nirmala Sitharaman proposed a 30 per cent tax on income from the transfer of virtual assets, which would add to the income tax of 30 per cent on earnings from digital assets transactions, which would be included in the Union Budget 2022 -- 23. The new income tax rules on digital assets went into effect on April 1.
Even if a taxpayer's total income falls below the threshold of 2.5 lakh, the gain from virtual assets, including cryptocurrencies, is taxable.
The idea of 28 per cent GST will make cryptocurrencies heavily taxed. This will bring cryptocurrencies to par with casinos, betting and lottery as far as taxation is concerned.
The industry is open to dialogue with the larger GST council on such matters. It will be great if deliberations are made to keep the taxation on VDAs in line with India's treatment of other regular financial instruments and to evaluate the different use cases of the token in order to make decisions on the taxation of the token, said Mr Sarkhel.
He added that it will be important to look at global jurisdiction arguments on such a tax.