The Indian government is reportedly considering levying a 28 percent GST on all cryptocurrency transactions. “At the moment, only a portion of the services provided by crypto exchanges is taxed. One tax expert warned that taxing the entire transaction at a higher rate of 28 percent could send the markets into free fall.

India’s Goods and Services Tax (GST) Council will soon make a decision on whether to expand the scope of applicable transactions and levy a 28% GST on all services and activities related to cryptocurrencies, CNBC TV18 reported Monday.

The GST Council is the apex decision-making body chaired by the country’s finance minister. The council has nominated its law committee to form a view on the GST issue relating to cryptocurrency. Sources told the publication:

There are various aspects of cryptocurrencies — the transactions involving cryptos, cryptos being used to make purchases, cryptos being received as payments. All these aspects are under examination and will be discussed by the law committee.

“Tax proposals will be analyzed by the law committee, which will recommend its views to the GST Council for its consideration,” one person familiar with the matter was quoted as saying.

The sources explained that crypto exchanges in India are currently classified as “an intermediary service” and are taxed at 18% GST. “They will have to be classified separately,” the sources noted, adding:

Every transaction will be subject to 28% GST, if agreed upon by the GST Council.

The GST rate for online gaming (without betting) is currently 18%. However, online games involving betting or gambling are taxed at 28% GST.

A number of parliament members have demanded that cryptocurrency transactions be treated as gambling. One person familiar with the issue explained: “Several MPs demanded to raise GST on cryptocurrencies to 28% like gambling and lotteries. As Parliament is an apex body, their demands will also be examined by the law committee.”

Commenting on the Indian government expanding the type of transactions that are subject to GST, Saket Patawari, an executive director at tax consultancy firm Nexdigm, opined:

Currently tax is levied only on the part of the services provided by crypto exchanges. Subjecting the whole transaction to tax at a higher slab of 28% could give the markets a free fall.

Cryptocurrency income is currently taxed at 30% in India. Moreover, a 1% tax deducted at source (TDS) will start being levied on crypto transactions on July 1.

Meanwhile, the Indian government is working on the country’s crypto policy. Finance ministry officials have been consulting with the International Monetary Fund (IMF) and the World Bank on cryptocurrency regulation.