GST on crypto transactions in the works

The government has started work on a comprehensive indirect tax regime for crypto assets that would check any revenue loss to the exchequer due to the ambiguity around the true nature of these assets.

The finance ministry plans to define the characteristics of cryptocurrencies, their usage, and how they fit into the existing legal framework, two people aware of discussions in the government said. Once its legal nature is decided, the appropriate GST rate will be decided, they said, requesting anonymity. It could even be a new GST slab between 18% and 28%, they added.

“We are still discussing the applicability of GST in case of crypto assets…right now, it is levied on services… so we need to see if crypto assets are declared as a good or service. We can have a special rate for it. It may not necessarily be 18% or 28%. Maybe somewhere between that. We have had a few discussions on it and will arrive at a decision soon,” said one of the two people.

The move indicates efforts of the indirect tax administration to catch up with shifts in the world of technology and finance. “A better understanding of how cryptocurrencies fit into our legal system is the pre-requisite for the decision on the GST rate,” said the second person. An email sent to the finance ministry on Friday seeking comments for the story remained unanswered till press time.

Crypto assets have been a subject of heated debates, with the Reserve Bank of India saying they are a threat to the country’s financial stability. Meanwhile, the Centre is in touch with multilateral agencies and the Bank for International Settlements to develop a consensus on regulating such assets.

Source from - https://www.livemint.com/market/cryptocurrency/central-govt-readies-indirect-tax-regime-for-crypto-assets-11663528144779.html