Yesterday, the GST council of India hinted at imposing a 28% GST on crypto transactions. This is in addition to the 30% tax already levied by the government on all gains made on digital assets. While #GSTonCrypto trended on Twitter for a while, the noise around bear market was enough to suppress it soon.
Out of all the brilliant memes that came out of this conversation, one of them particularly caught my eye.
While it looks like a hearty attempt to take a jab at the current tax situation, I wanted to highlight that this is far from reality. Even the understanding around GST on crypto is half baked at best right now.
Well, there is a long and a short answer to this question. I would start with the longer version. In my opinion, it is very difficult to regulate an asset like crypto for a country of our size. Compare it with China which has a similar population. They banned crypto outright.
On the other hand, the Indian government has at least taken steps to regulate this asset class. It would have saved them a ton of time, money and effort to simply put a blanket ban on crypto assets.
So first of all, I think this is a step in the right direction. It clearly shows the intent of the government to understand and regulate this space. After years of ignorance, they have finally come to acknowledge the existence of crypto.
Secondly, I agree that 30% is a tad bit much. We could have lived with a lesser brackett too. However, it's not written in hard stone. Government can reconsider it in the upcoming budgets as well.
For your reference, when income tax laws were formulated after independence, the highest tax slab was fixed at 97.75%.
With that being said, there is a significant chunk of the population that would face severe implications because of this. Yes, traders might find it really difficult to manage the 1% TDS for their daily transactions. I would not deny the fact that this tax structure might be specifically aimed at reducing speculation and hence trading.
To summarize everything, just like Blockchain and Cryptocurrency space, everything is evolving right now. Who knows what narrative takes over in the upcoming days, months or years.
Nonetheless, we'd all agree on one fact. It is an exciting area to be in. I'd like to quote Sandeep Nailwal- Founder of Polygon.
"A month in crypto is equivalent to 3 normie months"