25% GST plan on crypto dampens investor sentiment
Proposed indirect tax is in addition to 30% I-T, which is effective from April 1, on profits made from cryptocurrency trading; Some say it helps better regulation
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Mumbai: The central government's plan to impose a 28 per cent GST on cryptocurrencies may discourage investors from engaging in cryptocurrency trading.
The government proposed a 28 per cent GST on services and all cryptocurrency-related activities. The indirect tax will be in addition to the 30 per cent Income-Tax (I-T) on profits from cryptocurrency transactions, which came into effect since April 1. Following this initiative, the combination of the two taxes will make crypto currency provincially regulated in India, which is a big plus for crypto investors.
Talking to Bizz Buzz, Kunal Jagdale, founder, BitsAir Exchange, says: "The imposition of a 28 per cent GST on cryptocurrencies is not surprising given that many other items are subject to a 28 per cent GST, but it may discourage a little bit some users from engaging in cryptocurrency trading."
Levying GST or any other additional tax on crypto essentially puts off the initial original value of decentralisation of digital and financial assets. After the 30 per cent tax already reinforced on
crypto, introducing an additional tax shall drive away investors from digital assets.
Chinka Gupta, CEO, ArcadeNetwork, says: "The crypto economy certainly is big now and needs regulations. However, the fine line between balance and centralisation needs to be taken care of. The core technology like blockchain behind creation and transaction of such assets itself can be made secure enough to bring in necessary regulations in the sector."
The Centre is reportedly considering levying a 28 per cent GST on all crypto transactions, including mining, sales and purchase of cryptocurrencies.
Amit Gupta, MD, SAG Infotech, says: "There is already a 30 per cent tax being levied on profits made from the sale of crypto assets and NFTs. This GST on crypto transactions is expected to further increase problems for the crypto industry and might even discourage many
investors to trade in these digital assets."
Experts feel that the government may expand the indirect tax net over cryptocurrencies to cover the entire gamut of activities including their usage for exchanging goods and services at the highest slab of 28 per cent.
The reason behind this being the fact that a host of Parliamentarians demanded to treat the virtual currencies at par with lotteries and gambling.
