India: both Income tax and GST may apply to crypto
The Indian government is likely to levy both direct and indirect taxes on crypto assets, as per a local report. A source to the media outlet noted,
“One of the key issues is taxation. If there is gain or income from crypto, it should be taxed per capital gains rules. Similarly, if there is service involved in the transaction, then GST needs to be levied.”
Tax guidance in India
The news comes ahead of the upcoming Winter Session of Parliament, where a comprehensive crypto bill is expected to be tabled. Investors can reportedly expect guidance on crypto income tax and Goods and Services Tax (GST) in the draft.
The November session is considered crucial for the country as India has softened its stance on the matter lately. While reports claim that India will not grant a legal tender status to crypto, it is also unlikely to ban the asset class. This is also considering that the South Asian country has around 20 million crypto users, as per industry estimates.
While there will be regulatory clarity after the bill is discussed, cryptocurrencies can be taxed depending on individual tax slabs with applicable surcharge and cess. On the other hand, crypto platforms can attract 18% GST.
Additionally, as per an Indian media report,
“The Indian government is planning to compartmentalize virtual currencies and their tax treatment on the basis of their use case — payments, investment, or utility.”
More global regulations
While India is looking ready to designate investment status to the crypto class for taxation purposes, other countries are also working on such regulations. Japan for instance. It recognizes digital assets as legal property and is set to introduce “strict” tax rules. Where the highest tax bracket will attract 45% on cryptocurrency gains.
Meanwhile, in the US, Congress made way for the infrastructure bill last week, that contains tax reporting requirements for crypto investors.
Coin Center’s Jerry Brito noted that the provisions of the $1-trillion bill will take effect after January 1, 2024. Meanwhile, the industry is expressing displeasure against the broad definition of “brokers” and a statute for personal reporting requirements.
It is also noteworthy that cryptocurrencies in Switzerland are subject to wealth tax. Meanwhile, other countries can be tagged as crypto havens. El Salvador, for example, has exempted foreign investors from taxation on crypto gains.