GST council to consider sales tax on cryptocurrency next week

An Indian ministerial panel will meet next week to discuss a goods and services tax on cryptocurrency transactions, people with knowledge on the matter said.

The panel, comprising federal and states’ finance ministers, is seeking to broaden the tax net to track dealings in virtual digital assets in a more effective manner, the people said, declining to be identified citing rules on speaking with media. The panel is meeting for two days starting June 28 in the northern Indian state of Chandigarh.

The panel is unlikely to finalize a rate in the upcoming meeting but discussions may be held on placing it in the highest tax slab of 28%, the people said.

A finance ministry spokesperson did not immediately respond to calls seeking comments.

Earlier this year, Finance Minister Nirmala Sitharaman imposed a levy of 30% on income from transfer of virtual assets and a 1% tax at source on all crypto transactions in a bid to assess the size of crypto market in the country and track users. The move was seen as removing uncertainty about the legal status of crypto transactions.

However, there is still no clarity on imposition of a sales tax on digital currencies due to ambiguity in its treatment as goods or services and a lack of a regulatory framework.

The federal government is already working on a legislation to either regulate or tighten provisions though it is expected only after a global consensus emerges on regulating such assets, Bloomberg had earlier reported.

Digital currencies have been under pressure all year along with other risky assets as global central banks have started to hike interest rates to quell soaring inflation. Bitcoin is down roughly 50% this year, and Ether has slumped 70%.