- 30% tax on revenue earned through the crypto market and 1% TDS on crypto transactions.
- A step forward to the legislation of crypto exchanges in the country.
The GST Council has said have appointed a special legal committee to overtake the imposition of 28% tax for all crypto-related activities such as exchanges, trading, digital wallets, NFT, and staking over different ecosystems. This special is expected to be seated at the next council meeting and have an official declaration. Currently, 18% is been collected from services by the crypto market. During Budget 2022, the Finance minister stated that 30% tax will be levied for income from crypto exchanges starting from April 2022 & 1% TDS on cryptocurrency transactions from July 2022. It is also been clearly stated that no loss in the crypto transaction can be used for deduction or to set off profits. Early it was expected that crypto will be treated similar to equity, currency, or gold, but that is definitely not the case now since taxation on all gold-related transactions is only 3%.
Rajat Mohan, Senior Partner, AMRG & Associates, states:
“Private cryptocurrency can neither be termed ‘money’ nor be categorized as ‘securities’ for taxation, thereby, what remains to be checked is whether the legal framework would categorize the same as ‘actionable claim’ or not”
Legislation of Cryptocurrency
Around the globe, many nations have legalized crypto activities and some are in process of doing so. Over the month, the Central African Republic has declared Bitcoin as its official currency, and Hawaii has set up a special task force to study the crypto market. Though on budget 2022-2023, Finance Minister declared that taxation on crypto income doesn’t provide it a legal status, the addition of a new section to Income Tax Act, 1961 for virtual digital assets can’t be totally overseen. The GST council’s new constituted committee also be a step forward but their 30% tax proposal seems troublesome among crypto traders, they hope the government to be considerate about all the losses they face like, the transaction fees, and frame the regulations.