NEW DELHI: At a time when crypto platforms are struggling with a huge drop in transaction volumes, a 30% tax and a 1% TDS on transactions, the industry is concerned about the possibility of a 28% GST on virtual currencies.
According to various reports, the GST Council is mulling a 28% tax on cryptos, and the industry says it is open to dialogue with the council on this issue. “It will be great if deliberations are made to keep the taxation on VDAs (virtual digital assets) in line with India’s treatment of other regular financial instruments and/or evaluate the different use cases of the tokens while making decisions on crypto taxation,” said Aritra Sarkhel - Director, Public Policy at WazirX.
Vikram Subburaj, CEO of Giottus Technologies, urges the government to give clarity on such speculation. It will be a significant burden for investors who are already pushed to the brink given 30% tax on gains with no offset and 1% TDS, he said.
At the same time, he welcomes the government’s approach to formalise the sector and eventually regulate it under a regime.“We, however, strongly believe that new regulations should encourage and protect investors without pushing them into non-compliance,” he said.
When asked whether levying 28% GST will regularise cryptocurrencies in India, Rachit Chawla, founder and CEO of Finway FSC, said there was never a ban on cryptocurrency in India and it remained as a grey area which remains unregulated by the government.
“A new section – 115BBH – has been added in the Income Tax Act, 1961, to make digital assets taxable. So, in a way it is regularising cryptocurrencies and assets,” he said.
GST, as of now, is being applied by the industry players on the services provided and not on the entire crypto invoice.
"This (28% GST speculation) does not mean the government is regularising crypto. It would be another step towards adding clarity for cryptos in India. The applicability of GST to full price is not known but the income tax is applicable only for the profit earned. On the other hand, the TDS is applicable for the seller that can be offset as part of the income tax one has to pay," Sathvik Vishwanath, co-founder and CEO of Unocoin crypto exchange told TNIE.
'Informal pressure from RBI'
Meanwhile, Nasdaq-listed Coinbase CEO and co-founder Brian Armstrong at the company's earnings call spoke about the Reserve Bank of India's (RBI) informal pressure.
He said there's a lot of interest in crypto amongst the people in India.
"So we had an integration with what's called UPI. A few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India, which is kind of the Treasury equivalent there," he said.
Armstrong said that India is a unique market in the sense that the Supreme Court has ruled that they can't ban crypto. But there are elements in the government there, including at the RBI, who don't seem to be as positive on it.
He said the company's preference is to work with India and focus on relaunching. "There are a number of paths that we have to relaunch with other payment methods there (in India). And that's the default path going forward. So my hope is that we will be back in India in relatively short order along with a number of other countries where we're pursuing international expansion similarly," he added.