The Indian government has been hesitant to legalize cryptocurrencies. However, they are well aware that there is a lot to be made from them through taxes.
According to the news agency Press Trust of India, the government is looking into how it could tax the entire value of a transaction involving digital assets under the goods and services tax (GST). Trading exchanges’ crypto services are now classified as financial services.
Cryptocurrencies are treated similarly to lottery, casino, gambling, or betting gains, which are subject to a 31.20 percent GST on the total value. Stock investments, on the other hand, have a tax rate ranging from 0% to 15%, depending on whether they are reported as company income or short-term capital gains.
According to BrokerChooser, a broker search and comparison website, India has 100 million bitcoin users, the biggest number in the world.
India’s stance on cryptocurrency taxes
According to the requirements of the Indian budget for 2022-23, all crypto income would be taxed at a flat 30% rate. The government has also imposed a 1% tax deducted at source (TDS) on all cryptocurrency transactions, regardless of profit or loss.
Experts predict that when the TDS takes effect in July, it will reduce speculative trade and diminish the volume of crypto trade in India. According to projections by Nischal Shetty, the founder of India’s cryptocurrency platform WazirX, it may generate an additional $100 million in revenue.
Aside from cryptocurrency trading, the government is considering taxing cryptocurrency mining profits as commodities or services. Furthermore, the government intends to include crypto trading on international platforms under the GST.
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