Gst Breather For Crypto Eco-System, Council May Want Further Study Before Deciding On Taxation

The upcoming GST Council meeting on June 28-29 in Chandigarh is expected to have a packed agenda as sources say the council is expected to give the crypto industry a break.

Sources told CNBCTV18 that the GST Board-appointed assembly committee “suggested postponing the proposal until the government finalizes its view on legality and, in the meantime, has suggested that clarification needs to emerge on the applicability of GST on crypto exchanges and activities such as mining, barter, wallets which can only be achieved after further study.

“For this, the committee suggested that the council may require the states of Haryana and Karnataka to submit a document on GST on crypto services/activities,” they added.

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The Fitment Committee reportedly considered that “Crypto Assets refer to an algorithm based on a decentralized convertible virtual asset protected by cryptography. In such a case, various activities are involved.”

“Government and Ministry of Finance introduced taxation of Virtual Digital Assets under the Income Tax Act, but RBI had issued a circular in 2018 prohibiting banks and financial institutions from trading and providing services to facilitate transactions in virtual currencies, although the Supreme Court struck it down,” they added.

“It is also important to note that the Ministry of Finance is also working to get a bill on virtual digital assets and its own digital currency, which has not yet been published. Therefore, it is important to ‘identify all relevant supplies associated with the crypto-ecosystem that are under GST, thus the Equipment Committee wants the applicability of GST to be investigated properly before announcing any hastily tax’, sources, who did not wish to quote said.

Under such circumstances, it is better for the government to come up with a proper study, take all aspects into consideration before making any GST liability announcement, the sources added.

In what could be a pause for the industry, crypto exchanges, etc., the assembly committee suggested that the council might like to set up a proper study, which could give the industry and others stakeholders a chance to voice their concerns and suggestions.

“The assembly committee discussed in detail various activities associated with cryptocurrencies and NFTs and their taxation. It was felt that issues with the crypto ecosystem required further study. It was decided that Haryana and Karnataka

will study all aspects and submit a document to the assembly committee in due course,” the sources added.

However, it is up to the GST Council to take a final call, as it is due to meet to discuss the nuances and suggestions made by the assembly committee next week in Chandigarh.

(Edited by : Anand Singha)

First post: STI

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