Reports indicate that the Indian finance ministry is trying to figure out how the goods and services tax (GST) could also be applicable to crypto transactions.
According to a source, they will only be able to calculate the GST rate after gaining a better understanding of how these digital currencies are incorporated into the legal system of the country.
On Monday, reports indicated that the finance ministry of India is trying to figure out a comprehensive regime for the implementation of the goods and services tax (GST) on cryptocurrencies.
A source indicated that currently, the GST is only applicable in the case of services, so they have to discuss its applicability in terms of crypto assets.
This means having to figure out whether crypto assets fall under the category of goods or services. Local media had previously reported that the government was trying to decide whether to impose a GST of 18% or 28% on crypto assets.
But, it was also asserted that they could come up with a special GST rate for crypto as well. This may not be 18% or 28% and could be somewhere in the middle.
They said that they have had a number of discussions about it and would come to a discussion soon.
Another source said that the position of crypto in the country’s legal system would have to be determined before the GST rate can be determined.
It should also be noted that the GST would only apply to service or margin fees and will not be applicable to the full value of the asset.
Apart from that, the Indian government is also considering the treatment of certain transactions, such as airdropped crypto tokens, or mining.
Reports indicated that there had been a meeting of a ministerial panel at the end of June for the discussion of the GST tax that will be applicable on crypto transactions.
But, the officials did not reveal what decision had been made in the meeting.
Cryptocurrencies have already been subjected to taxes in India. The government has already imposed taxes on crypto transactions as well as crypto income.
On April 1st, a tax of 30% was put into effect on all income generated from crypto assets. Moreover, a 1% tax deducted at source (TDS) also became applicable on crypto assets from July 1st.
Meanwhile, the Indian government is also working on developing the crypto policy in the country. While a number of bills have been developed for this purpose, there has not been any progress as yet.
However, time is now running short for India because it needs to become compliant with the rules of the Financial Action Task Force (FATF).
In order to accomplish this goal, the government would have to put forward its stance regarding the legality of cryptocurrencies in the country early next year.
The FATF has demanded a response on this matter by May, which means that India needs to speed up its crypto regulation efforts.