Months after levying taxes on income from virtual currency, the government is mulling over the applicability of the Goods and Service Tax (GST) on cryptocurrency to bring more clarity on such assets, a Business Standard report suggests.
While there is no specific provision for cryptocurrency assets in the GST regulations as of now, a tax of 18 per cent is levied on crypto exchange services which are categorised as financial services.
“Discussions have been held around the classification of crypto assets. The law committee and the fitment committee of the GST Council will look into the classification and the tax treatment of crypto assets. The law panel will make suggestions on whether crypto is treated as a good, commodity, or service,” Business Standard reported, quoting a senior government official.
The official also added that based on these classifications, the fitment committee of the GST council will decide on the tax treatment of such assets after which the GST council will take it up. However, citing it to be a long and time-consuming process, the official clarified that this might not be a part of the upcoming council meeting.
As per the report, the Central Board of Indirect Taxes and Customs (CBIC) feels virtual assets could be included under Schedule 2 of the Central Goods and Services Tax Act, 2017, which specifies the activities or transactions that are to be treated as the supply of goods or supply of services. Besides, taxing certain crypto transactions at the highest GST bracket of 28 per cent is also deliberated upon. GST panels are also said to be deliberating on whether GST would apply only to marginal value or the entire value of virtual assets.
Another official told Business standard, “Some of the contentious transactions include mining of crypto assets or the exchange of virtual assets between the two persons. It is unlikely that crypto will be taxed on the gross value, per se.” He further said that discussions on imposing reverse charges on Indians investing in cryptocurrencies through foreign crypto platforms are also underway.