As cryptos lose sheen and exchanges shut shop, a proposal for a detailed and clearer structure for applicability of Goods and Services Tax (GST) on the currency is likely to be put on the backburner.
According to the Tax Department, commissions paid to the operator or an exchange providing a platform for transaction in cryptos is chargeable under GST. Similarly, in the case of exchanges that are located abroad, the recipient of service in India will be liable to pay GST on reverse charge basis. This service is being treated as financial services and the applicable rate is 18 per cent.
Still, GST on cryptos is a contentious issues and is subject to litigation. The most important issue is whether cryptos should be treated as goods or services. Then, there is the issue of levying taxes on mining of cryptos. Considering these, the CBIC initiated a discussion with stakeholders and has started working on a detailed and clear structure of GST for cryptos. It is likely to be placed before the GST Council.
However, in the present scenario, this does not seem to be a priority. “Crypto market has been hit very badly. Prices are down and business is getting affected. In such a situation, GST proposal unlikely to see lights in near future,” a senior government official told businessline.
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