Consider levying 28% GST on cryptocurrency

New Delhi: The Indian crypto market breathed a sigh of relief when the central government announced in the budget that it would levy 20 per cent tax on earnings on digital assets, i.e. cryptocurrencies. After the government announced to levy tax on transfer along with income, now it is also preparing to levy additional tax.

According to a report, the GST Council may decide to impose 5% GST on cryptocurrency or virtual currency. A decision on this could be taken at a possible meeting of the GST Council after the budget session of Parliament. Finance ministry officials, including the Reserve Bank, have also spoken of tightening control over the crypto market.

Sources said that the Modi government may put cryptocurrency in the lottery category. At present, there is a provision of 5% GST on private lotteries and horse riding. The way the government is now levying crypto earnings and transfer tax has cleared the way for it to go under GST. According to the government, if this is a type of property that people buy, then like other such transactions in the country, the way is open for GST collection on it.

Under the Income Tax Act 181, income from any source not mentioned in the taxable category is chargeable for income tax. Most of the virtual currencies do not fall under the definition of Indian currency under GST law so it cannot be considered as money.