Comments
As cryptos lose sheen and exchanges shut shop, a proposal for a detailed and clearer structure for applicability of Goods and Services Tax (GST) on the currency is likely to be put on the backburner.
According to the Tax Department, commissions paid to the operator or an exchange providing a platform for transaction in cryptos is chargeable under GST. Similarly, in the case of exchanges that are located abroad, the recipient of service in India will be liable to pay GST on reverse charge basis. This service is being treated as financial services and the applicable rate is 18 per cent.
Still, GST on cryptos is a contentious issues and is subject to litigation. The most important issue is whether cryptos should be treated as goods or services. Then, there is the issue of levying taxes on mining of cryptos. Considering these, the CBIC initiated a discussion with stakeholders and has started working on a detailed and clear structure of GST for cryptos. It is likely to be placed before the GST Council.
However, in the present scenario, this does not seem to be a priority. “Crypto market has been hit very badly. Prices are down and business is getting affected. In such a situation, GST proposal unlikely to see lights in near future,” a senior government official told businessline.
Meanwhile, the proposal on GST being put on the backburner, has not gone down well with experts. Jatin Arora, Partner with Phoenix Legal says taxing crypto transactions under GST law requires a thorough understanding of crypto transactions. Crypto assets are digital assets and are generally decentralised. Different crypto assets have different functionalities — some are mediums of exchange, some have a value like currency, and some a unit of accounts. Besides buying and selling of crypto assets, there are a variety of related transactions such as mining, exchange, transfer and airdropping. Then there are issues related to operations of the exchanges and variety of services offered by them.
Lack of proper understanding on how the crypto sector works has led to different views being taken by the tax department till now. “Classification of various transactions into goods or services, valuation, rate of tax, availability of ITC, are important questions and has to be answered for each transaction. A single yardstick to tax all transactions similarly cannot be adopted here,” he said.
According to Parag Mehta, partner, NA Shah Associates, bringing cryptos under the ambit of GST has been an issue and clarity for the same is being awaited for a long time. Further, if GST is applicable, the question on the rate and the one responsible for paying GST must be answered. Crypto exchanges only act as an intermediary. So, whether individual traders or investors will be liable to pay GST on said purchase or sale is another issue. If they are made liable to pay GST, a mechanism to disclose the details of buyers and sellers will have to be brought in place, to enable them to raise proper invoices. However, this will be a cumbersome process.
Related Stories
Hackers demand ₹200 crore in cryptocurrency from AIIMS-Delhi as server remains down for 6th day
Patient care services are being managed manually as the server remained down“The longer it is delayed the problems for the trade are bound to increase multifold. Clarity on taxability, exemption, rate and person responsible is required at earliest. Putting it on a back burner will increase the problems for all concerned,” he said.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.