The Government is set to take a proposal to the GST Council to levy Good and Services Tax (GST) on entities that provide a mining platform for cryptocurrency assets and those which use virtual digital assets as a medium of exchange in purchases. While the Central Board of Indirect Taxes and Customs (CBIC) is assessing the matter, its Chairman Vivek Johri said the proposal could be to tax these of 18 per cent, reported Business Standard.
The rate of 18 per cent is the same which cryptocurrency exchanges pay on commissions. Johri said the CBIC would finish its internal assessment within a month, then take it to the GST Law Committee, and subsequently to the Council itself, where the final decision rests, Business Standard reported.
“If I am supplying or buying crypto assets or mining using crypto currency or using a medium of exchange to pay for goods or services, how is that to be treated under GST? That needs some more deliberation and examination. We hope to complete that examination in about a month’s time,” Johri said.
Date for the next GST council meeting has not been scheduled, but it is expected to happen in March, reported BS.
“There are aspects of cryptocurrency transactions where the applicability of GST is eminently clear. Exchanges are a good example. So, the exchange operators providing a service to anybody who’s indulging in the supply or purchase of crypto, and that is taxable. We have been recovering that tax,” Johri said.
Whenever the issue is taken up for the GST Council’s consideration, it will clear the air on indirect tax treatment of the fast-growing sector. In her Budget 2022 speech, Finance Minister Nirmala Sitharaman had clarified the direct tax provisions.