Cryptocurrency industry braces for more uncertainty with proposed 28% GST
After a 30 percent tax on gains from crypto assets and a 1 percent tax deducted at source (TDS) on transactions, the Goods and Services Tax (GST) Council may now put cryptocurrencies and related services under the 28 percent tax slab.
The industry has already witnessed a massive drop in transaction volumes since the income tax came into effect on April 1, and the possibility of a higher GST rate is likely to damage the industry further.
From discussions with industry participants, Moneycontrol learns that exchanges are worried about what this could mean for the future of crypto trading in India.
“We are obviously not happy with this thought process. It's going to get very difficult if they take such a view. No country has taken such a view and the upcoming TDS is already challenging. Frankly, we don't know what the thought process is, do they want to ban it without banning it? We have no idea,” said an industry source who did not wish to be named.
He added that the industry hopes to approach the government for talks.
“For something like this, ideally, we would want to have some facetime with the government. On the one hand, we have heard that the government will take its time but on the other that it may regulate the industry soon, these are mixed signals,” said the person.
Akshay Aggarwal, venture partner at Draper Dragon Fund, believes the proposed measures will further fuel the trend of crypto exchanges and talent moving out of India.
“Apart from retail investors, it would also affect algo crypto traders who trade based on algorithms. While trading volumes will be hit, these exchanges are registered outside of India and they will start foraying into other markets,” he said.
The possibility of a 28 percent GST rate on crypto
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