Even though profit from cryptocurrencies like Bitcoin and Ethereum are taxed at 30%, that is only on converting that into Indian fiat, only then the citizen has to pay the tax of 30% of profits of crytpocurrencies.
Union Budget 2022 Outcome:
- Income from transfer of virtual digital assets such as crypto, NFTs will be taxed at 30%.
Crypto is taxed like stocks and other types of property. When you realize a gain after selling or disposing of crypto, you're required to pay taxes on the amount of the gain. The tax rates for crypto gains are the same as capital gains taxes for stocks
At the same time they cannot put GST(Goods and Services Tax) on payments in the form of cryptocurrencies as it is not legal tender.
Cryptocurrency will never be a legal tender in India: Finance secretary (Source)
Now, as long as the citizen keeps the profit or money in the form of cryptocurrencies and keeps circulating it, without ever converting it into fiat, he should not be taxable, technically.
This is huge issue as GST is put on the time of transaction and if that happens completely in cryptos, how can the Govt of India put GST on such transactions?
With increasing adoption of cryptos this needs to be addressed. So what should people do regarding filing GST if their money is collected in terms of cryptos?