Indirect tax department has initiated some important investigations against crypto exchanges to escape liability of GST. It might even have set a pattern around categorization of the crypto assets for purpose of taxation.
The Legal experts had quite long debated about categorization and about tax treatment related to the cryptocurrencies. They will also converge on if the cryptocurrency is actually a currency, or a commodity, or service, or it should be categorized as something else.
GST liability on Crypto transactions!
The DGGI also known as Directorate General of GST Intelligence have conducted raids on various crypto exchanges and instructed them to pay the GST amount on various transaction fees and the margins as applicable.
GST on the cryptocurrency is a subject matter of dispute from valuation and the taxability perspective. Transaction fees usually paid by the senders. They will also be part of the consideration as these are usually make in crypto in response to supply of services through recipient of services. The cryptocurrencies also rewarded through blockchain system to crypto miners upon the successful verification of various transactions. This is crucial and important aspect.
Exchanges still seeking clarity!
The Crypto exchanges are looking for clarity on taxation issue. Recently, we don’t have the provision of crypto-specific in GST laws. However, they are looking for clarity on tax interpretations. They also are abiding through 18% GST on exchange revenues from different fees and charges.
Also, the industry bodies also believe that tax department’s stand to be justified as well as it will simply bring more of clarity. The tax department wants to simply check all the brokerage as well as commission. It earned by exchanges even has drawn the GST at 18%. Also, member of BACC also known as Blockchain and Crypto Assets Council.
