The government is assessing the applicability of goods and services tax (GST) on various cryptocurrency transactions such as mining of these digital assets, reported Economic Times.
The issue is being evaluated internally at the Central Board of Indirect Taxes and Customs (CBIC) and a proposal will be looked at in the GST Council, CBIC chairman Vivek Johri said.
“There are several aspects of the operation which intersect with GST as a tax,” he said, further reported Economic Times. The Union budget 2022-23 had introduced a flat 30 percent capital gains tax on virtual digital currencies beginning April 1, 2022. With the levy of GST on other transactions, the overall incidence of tax on cryptocurrencies could raise.
Services provided by a platform were duly recognised as taxable services and authorities have been charging them to tax, said Johri.
However, this issue of supply of cryptocurrencies needs more detailed examination, Johri added. Consequently, it could take another two-three months to arrive at any concrete development, he added.
“You mine crypto...the first question is does that involve a supply or not. Second is, I acquired crypto and I’m selling it to somebody else or I'm using it for barter. How do we deal with that,” he said.
While pointing out some of the issues the tax department is looking into, he said: “Is that a supply of money, or is that a supply of goods and services, or is it just an actionable claim?”
He also said that the department will try for the proposal to first undergo the process of law committee and then it will go through the GST Council.