INSUBCONTINENT EXCLUSIVE:
Government working on classification of cryptocurrency under GST law: ReportNew Delhi: The government is working on classifying
cryptocurrency as goods or services under the GST law so that tax can be levied on the entire value of transactions.Currently, 18 per cent
of Goods and Services Tax (GST) is levied only on services provided by crypto exchanges and is categorised as financial services.GST
officers are of the view that cryptos, by nature, are similar to lottery, casinos, betting, gambling, horse racing, which have 28 per cent
of GST on the entire value
Besides, GST at 3 per cent is levied on the entire transaction value in the case of gold."There is a clarity needed regarding levy of GST on
cryptocurrencies, and whether it has to be levied on the entire value, We are seeing whether cryptocurrencies can be classified as goods or
services and also removing any doubt on whether it can be called an actionable claim," an official said.Another official said that if the
GST is levied on the entire transaction of cryptocurrencies, then the rate could be 0.1 to 1 per cent."Discussions are in a nascent stage on
the rate of tax, whether it would be 0.1 per cent or 1 per cent
First, a classification decision will have to be finalised, and the rate will be discussed," the official told PTI.The Goods and Services
Tax (GST) law does not clearly state the classification of cryptocurrency
In the absence of a law regulating such virtual digital currencies, the classification has to consider whether the legal framework
classifies it as an actionable claim.An actionable claim is a claim that a creditor can make for any type of debt other than a debt secured
by a mortgage of immovable property.The 2022-23 Budget has clarified the levy of income tax on crypto assets
From April 1, a 30 per cent I-T plus cess and surcharges will be levied on such transactions in the same manner as it treats winnings from
horse races or other speculative transactions.The Budget 2022-23 also proposed a 1 per cent TDS on payments towards virtual currencies
beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient
The threshold limit for TDS would be Rs 50,000 a year for specified persons, including individuals/HUFs who are required to get their
accounts audited under the I-T Act.The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be
taxed effective April 1.The government is working on legislation to regulate cryptocurrencies, but no draft has yet been publicly
released.AMRG - Associates Senior Partner Rajat Mohan said actionable claims, other than lottery, betting and gambling, are not exigible to
GST."Private cryptocurrency can neither be termed 'money' nor be categorised as 'securities' for taxation; thereby, what remains to be
checked is whether the legal framework would categorise the same as 'actionable claim' or not," Mr Mohan added.
