No Bell Rings For Crypto Investors, 28 Percent GST On Cryptocurrency Not Likely
Amid several media reports of GST likely to be imposed on crypto currencies, now the news has surfaced that the Goods and Services Tax (GST) council is not going to levy 28 per cent GST on the digital currency.
According to the media reports, the crypto will not be treated at par with online gaming platforms.
Multiple media sources reported recently that the GST council is considering a 28 per cent tax on crypto currency, similar to the present GST on online gaming, casinos, betting, and lottery.
The Union government in its annual budget has proposed a flat tax of 30 per cent on the income generated by selling or buying crypto currencies to legitimise their trading in crypto currencies, NFTs, and other digital assets.
In line with its plan to have a fiat digital currency, the government also proposed to issue a Digital Rupee or Central Bank Digital Currency (CBDC) in fiscal 2022-23.
Risk Of Money Laundering, Terror Funding
Finance Minister Nirmala Sitharaman had said that regulating crypto currencies is vital to mitigate the risk of money laundering and terror funding at a global level.
She said that regulation cannot be done by a single country within its terrain through some effective method and for doing it across the borders; technology doesn’t have a solution which will be acceptable to various sovereigns at the same time applicable within each of the territory.
She had said that regulation using technology will have to be so adept that it should not be behind the curve.
Crypto Industry Enraged Over Mounting Taxes
After the news came out that the GST was likely to be imposed on crypto currencies, it wreaked havoc on the industry which is already reeling under the heat of 30 per cent tax and 1 Tax Deducted at Source (TDS).
The industry participants argued that crypto currencies are an asset class with varied use cases across industries and are not akin to gambling or lottery. They have their fundamentals and aesthetics.
Hence, the industry had sought for tax reduction and is in talks with various stakeholders to bring TDS down between 0.01 and 0.05 per cent. At present, the transfer of digital assets will attract a 30 per cent tax and 1 percent TDS.
An investment arm of crypto exchange CoinDCX, its CEO and co-founder Sumit Gupta said, as an industry, we are engaged in discussion with different stakeholders to bring down TDS from 1 per cent to 0.01-0.05 per cent.
Meanwhile, CoinDCX Ventures, an investment initiative will invest INR 100 crore over the next 12 months in Web3 start-ups across sectors. It has already invested in seven start-ups including Taki and EPNS. It will be investing around USD 100k-1 million in each start-up and targets 40-80 investments.
What is crypto currency and how does it work?
There has been a huge buzz around crypto currencies and especially since the outbreak of COVID-19 pandemic and investors have been showing interest in them. Many countries including India are coming forward to launch their own crypto currency. However, China has banned it.
Crypto is digital or virtual currency that acts as a medium of exchange through a computer network which is secured by cryptography.
It is generated through mining which is the process by which crypto miners validate a crypto currency transaction with help of coding and data, and earn a crypto ‘as compensation for their work’.
The process of mining is carried out in a decentralised system with the help of computers.
Mining crypto is a complicated task and miners must guess the correct codes associated with the data to allow other miners on the network to continue this process.
Some of the famous crypto currencies that are currently available in the world are Bitcoin, Altcoin, Ethereum, XRP, Tether, Cardano, Polkadot, Stellar, and USD Coin.
For several days, the crypto market has crashed more and more. As on 10 May 2022, Bitcoin and several other top crypto prices hit new lows as it further crashed.
Ether futures led liquidation losses in the past 24 hours as crypto markets lost over 16 per cent of their overall capitalization.
Meanwhile, the price of Terra (Luna) has crashed massively to USD $0.190465 in the last 24 hours. LUNA price has fallen by over -95.7 per cent.
How one can invest in Crypto
In order to purchase crypto one needs a place to buy it from and put it in place so, in today’s world, there are many crypto currency exchanges in the market.
There are several different exchanges to choose from, with the most popular being Coinbase, GDAx and Bitfinex and CoinDCX. These exchanges allow you to purchase currencies like Bitcoin and Ethereum with a debit card. With most popular currencies, including Bitcoin, you can buy fractions of a coin, so you don’t need to invest thousands of rupees to get in the game.