The goods and services tax (GST) policy wing of the Central Board of Indirect Taxes and Customs (CBIC) is conducting an in-depth analysis to widen the coverage of tax on the crypto ecosystem. It is looking to bring in more activities such as mining platforms for cryptocurrency assets and the use of virtual digital assets (VDAs) as a medium of exchange in purchases under the tax net.
The GST Council may take up matter later this year in the meeting following the September one, sources told FE. Currently, an 18% GST is levied only on services provided by crypto exchanges and is categorised as financial services.
Crypto assets refer to the algorithm-based decentralised convertible virtual assets protected by cryptography. The crypto ecosystem involves various activities, including mining, exchange services, wallet services, payment processing, barter system and other different transactions.
After the policy paper on coverage of the entire crypto ecosystem is ready, the law committee of the GST Council will vet the recommendations. “We are still examining some of the issues such as what is the nature of the transactions/business, how they happen, which are the entities involved, is it always consumer-to-consumer or business-to-consumer, is there a system of registration, could there be onshore and offshore transactions. Also, there needs to be clarity whether certain transactions are goods or services,” a senior official said.
The VDA industry has seen rapid growth in India despite ambiguities around regulations and various challenges. In the Budget for FY23, the government imposed a 1% tax deducted at source on all VDA transactions. Besides TDS, the government mandated tax on any income from the transfer of VDAs at 30%, with no deduction and set off of losses, which may adversely affect the sector.
Source: The Financial Express
https://www.financialexpress.com/economy/cbic-studying-crypto-ecosystem-to-bring-more-activities-under-gst-net/2623940/
For more News like this, Subscribe TAXO today
