As per reports, a panel consisting of federal and state finance ministers is scheduled to meet in a week to discuss the goods and services tax on crypto transactions.
The panel will be meeting on two days which are 28-29 June. The meeting will take place in Chandigarh. The panel is seeking to broaden the tax net to track dealings in virtual digital assets in a more effective manner, people with knowledge on the matter said.
It is rumored that the panel won’t be finalizing a fixed rate during the course of this two-day meeting. However, the rate they will be discussing will be in the highest tax slab of 28%.
So the additional 28% tax will be implemented on top of the already 30% crypto income tax that users are paying on transactions.
In the first quarter of this year, Finance Minister, Nirmala Sitaraman announced that henceforth, a 30% tax will be levied on capital made from the transfer of virtual assets and a 1% tax at source on all crypto transactions. This was done with the aim of being able to assess the size of the crypto market in the country and track the users.
This step from the finance ministry led to the fall of crypto trading volume in India by 30%. The huge tax rate was too much to bear even for major exchanges such as Coinbase and FTX, making them consider leaving the Indian market entirely. To avoid the brunt of a 30% tax rate, a lot of Indians turned toward DeFi projects as they did not fall under the scope of the crypto income tax.
This move was done to remove any sort of confusion among the masses regarding the legal status of crypto transactions, but the imposition of a sales tax on digital currencies still seems to be unclear. A major reason for this is the ambiguity with which crypto goods and services are treated, that too with any sort of regulatory framework lacking.
India’s Goods and Services Tax Council (GST) was the first to propose a meeting to increase the taxes on crypto. The GST believes that crypto is no better than gambling your money away or wasting it on the lottery. The committee, therefore, plans to increase the tax rate so that Indian citizens are discouraged to buy crypto.