GST probe may set precedent for crypto taxation.

Even as the indirect tax department initiated investigations against several crypto exchanges for escaping Good and Services Tax (GST) liability, it may have also set a precedent around the categorisation of crypto assets for taxation.
Legal experts have long debated on the categorization – and tax treatment – of cryptocurrencies. They are yet to converge on whether a cryptocurrency is indeed a currency, a commodity, a service, or something else.

The Directorate General of GST Intelligence (DGGI) conducted searches and raids on several crypto exchanges and asked them to pay GST on their transaction fees or margins.

The tax department’s stand, say tax experts, could mean that at least part of what exchanges provide can be categorised as services. “GST on cryptocurrency has been a subject matter of dispute from the taxability and valuation perspective,” said Abhishek A Rastogi, Partner at Khaitan NSE 0.73 % & Co. “Transaction fees are always paid by senders; these will be part of consideration as they are made in cryptocurrency in response to the supply of services by the recipient of services, and cryptocurrencies are rewarded by the blockchain system to the crypto miners on successful verification of transactions.”

Source-THE ECONOMIC TIMES

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