Cryptocurrency As Goods Or Services Under GST Law: Report
Government working on classification of cryptocurrency under GST law: Report
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
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