This era is booming with cryptocurrency. Many Indians are investing in cryptocurrency. Whether you are a business owner, or an individual earning income through profession, if you have investments in Cryptocurrency, you must also know about GST on Cryptocurrency in India. This article will discuss the taxation and GST on cryptocurrency in India.
What is Cryptocurrency?
Cryptocurrency and currency are the two elements of the term. Currency is just the type of money utilized in a given nation, while crypto literally means anything that is concealed or masked.
When combined, the phrase “cryptocurrency” means “currency in secret or hidden files,” more specifically “digital money.” These digital currencies run on a peer-to-peer network, which eliminates the need for a regulator bank or administrator-type or third-party middleman.
The market is filled with many kinds of cryptocurrencies. More than 2000 different kinds of cryptocurrency are thought to be traded on the market. Few currencies have their values tied to a specific class of assets.
For instance, the USD Tether’s value, also known as USDT, is correlated with the USD’s value. Few other cryptos have values that are correlated with gold prices. Consequently, these currencies are also known as fiat currencies.
Is there any tax on cryptocurrency in India?
Cryptocurrency is taxed in India. During the presentation of the Union Budget, Finance Minister Nirmala Sitharaman proposed a 30 percent tax on capital gains on cryptocurrency transactions in the nation.
As a result, cryptocurrency are at par with lotteries, casinos, race courses etc. In India, the cryptocurrencies are treated as virtual assets and thus you will have to pay thirty percent tax on the profits earned through crypto.
Furthermore, 1% TDS(Tax Deducted at Source) is applicable on crypto transactions. It means when you sell cryptocurrency, the cryptocurrency platform has to mandatorily deduct the 1% TDS and then submit it to the government.
Learn more about this in detail at: TDS & Income Tax on Crypto & Virtual Assets | E-Startup India
GST Impact on Cryptocurrency in India
Currently, no particular GST slab has been designed for taxation of Cryptocurrency in India. The government is considering the following scenarios for levying the GST and understanding the GST Impact on Cryptocurrency in India.
- Mining of cryptocurrencies will be treated as Service as it generates rewards and transaction fees. Miners will have to pay GST through GST Return Filing and all the eligible miners will also have to mandatorily get GST Registration.
- The plan also treats key-holding “wallets” as taxable property. Providers of wallet services must have GST Registration.
- Cryptocurrencies will also need to have Online GST Registration and also pay their taxes on their earnings.
- The purchasing and selling of digital currency will be categorized as a kind of supply of goods. Services will also encompass additional connected operations that facilitate business, such as supply, transfer, storage, and accounting, among others.
- If the buyer and seller are both located in India, the transaction will be viewed as a supply of software, with the buyer’s location serving as the site of supply.
- When a transaction is made outside of Indian territory, it is subject to integrated GST and is regarded as a product import or export. There will be an IGST charge for cross-border purchases.
Therefore, it can be said that there is a significant likelihood that GST will be applied to cryptocurrencies and maybe even to mining services.
Moreover, If you want any other guidance relating to GST Registration, please feel free to talk to our business advisors at 8881-069-069.
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