Indian tax officials say crypto profits are like lottery wins

Indian authorities have been iffy about legalising cryptocurrencies. But, they surely know there’s much to earn from them through taxes. The government is studying how it could levy tax on the entire value of the transaction involving digital assets under the goods and services tax (GST), according to the Press Trust of India. As of now, crypto services provided by trading exchanges are categorised as financial services.

GST officers view cryptocurrencies similar to winnings from a lottery, casinos, gambling, or betting, which attract 31.20% GST on the entire value. By contrast, the tax rate on stock investments ranges from 0 to 15%, depending on whether it is filed as business income or short-term capital gain.

India has 100 million cryptocurrency users, the highest number in the world, according to BrokerChooser, a broker discovery and comparison platform.

India’s stance on taxing cryptocurrency

All crypto profits gained will be taxed at a flat 30% rate, according to provisions of the Indian budget for 2022-23. The government has also mandated a 1% tax deducted at source (TDS) on all crypto transactions, irrespective of a loss or profit.

This TDS is likely to curb speculative trade, experts say, and could deplete the volume of crypto trade in India when it comes into effect in July. It could fetch $100 million in additional income, according to calculations by India’s cryptocurrency platform WazirX founder Nischal Shetty.

Besides crypto trading, the government is considering taxing earnings from cryptocurrency mining as goods or services. What’s more, the centre even wants to bring crypto trading conducted on foreign platforms under GST.

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