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There are a lot of cryptocurrencies now. A lot of Indians are putting money into cryptocurrencies. Whether you own a business or work for a living, if you have investments in Cryptocurrency in India, you must also know about GST on Cryptocurrency. This article will talk about how cryptocurrency is taxed and how GST works in India.
What is Cryptocurrency?
The two parts of the word are “cryptocurrency” and “money.” Currency is just the type of money used in a country, while crypto means anything that is hidden or disguised.
When the words “cryptocurrency” are put together, they mean “money in secret or hidden files” or, more specifically, “digital money.” These digital currencies run on a peer-to-peer network, so there is no need for a regulator bank, administrator, or other third-party middleman.
There are many different kinds of cryptocurrencies on the market. On the market, people are thought to trade more than 2,000 different types of cryptocurrency. There aren’t many currencies whose values are tied to a certain group of assets.
For example, the value of the USD Tether, also known as USDT, is linked to the value of the USD. There aren’t many other cryptos whose prices are linked to gold prices. So, these currencies are also called “fiat” currencies.
Is there any tax on cryptocurrency?
In India, there is a tax on cryptocurrency. During the Union Budget presentation, Finance Minister Nirmala Sitharaman suggested putting a 30 percent tax on capital gains from cryptocurrency transactions in India.
So, cryptocurrencies are on the same level as lotteries, casinos, race tracks, etc. In India, cryptocurrencies are treated like virtual assets. If you make money through cryptocurrencies, you will have to pay a 30% tax on that money.
Also, cryptocurrency transactions are subject to a 1% TDS (Tax Deducted at Source). It means that when you sell cryptocurrency, the platform where you bought it has to take out the 1% TDS and send it to the government.
GST Impact on Cryptocurrency
At the moment, there is no specific GST slab for taxing Cryptocurrency in India. The government is thinking about the following ways to charge GST and figure out how it will affect cryptocurrency in India.
Mining for cryptocurrencies will be seen as a Service, since it gives out rewards and charges fees for transactions. GST will have to be paid by miners through GST Return Filing, and all miners who are eligible will have to get GST Registration.
The plan also says that “wallets” that hold keys are taxable property. Those who offer wallet services must be registered for GST.
Cryptocurrencies will also have to go through Online GST Registration and pay taxes on the money they make.
Buying and selling digital currency will be considered a type of goods supply. Services will also include other related tasks that help businesses run smoothly, such as supply, transfer, storage, accounting, and so on.
If both the buyer and the seller are in India, the transaction will be seen as a sale of software, with the buyer’s location serving as the place where the software was sold.
When a transaction happens outside of India, it is considered an import or export and is subject to integrated GST. When you buy something across borders, you will have to pay IGST.
Because of this, there is a good chance that GST will be applied to cryptocurrencies and maybe even mining services.
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Tag : GST Filing, GST Registration, TDS Filing