{"id":4222,"date":"2022-01-10T07:08:14","date_gmt":"2022-01-10T07:08:14","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=4222"},"modified":"2022-01-10T07:27:43","modified_gmt":"2022-01-10T07:27:43","slug":"cryptocurrency-treatment-as-goods-or-services-in-india","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/","title":{"rendered":"Cryptocurrency Treatment as Goods or Services in India"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69de98aa5392b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69de98aa5392b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#The_Treatment_of_Cryptocurrency_as_Goods_or_Services_in_India\" title=\"The Treatment of Cryptocurrency\u00a0 as Goods or Services in India:\u00a0\">The Treatment of Cryptocurrency\u00a0 as Goods or Services in India:\u00a0<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Taxation_on_Crypto\" title=\"Taxation on Crypto\">Taxation on Crypto<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Experts_Viewpoint\" title=\"Experts Viewpoint\">Experts Viewpoint<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Question_on_Business_Model\" title=\"Question on Business Model\">Question on Business Model<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Crypto_Trading_Process\" title=\"Crypto Trading Process\">Crypto Trading Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Recent_Proposals_on_Crypto_Taxation\" title=\"Recent Proposals on Crypto Taxation\">Recent Proposals on Crypto Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Features_of_CEIBs_proposals_during_this_regard_as_available_publicly_domain_is_excerpted_below\" title=\"Features of CEIB\u2019s proposals\u00a0during this\u00a0regard, as available\u00a0publicly\u00a0domain is excerpted below:\">Features of CEIB\u2019s proposals\u00a0during this\u00a0regard, as available\u00a0publicly\u00a0domain is excerpted below:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caindelhiindia.com\/blog\/cryptocurrency-treatment-as-goods-or-services-in-india\/#Precedent_for_Crypto_Taxation\" title=\"Precedent for Crypto Taxation\">Precedent for Crypto Taxation<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"The_Treatment_of_Cryptocurrency_as_Goods_or_Services_in_India\"><\/span><strong>The <\/strong><strong>Treatment of <\/strong><strong>Cryptocurrency\u00a0 as Goods or Services in India:\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4223\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Tax-implications-for-Cryptocurrency-in-India.jpg\" alt=\"Tax-implications-for-Cryptocurrency-in-India\" width=\"900\" height=\"506\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Tax-implications-for-Cryptocurrency-in-India.jpg 900w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Tax-implications-for-Cryptocurrency-in-India-300x169.jpg 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Tax-implications-for-Cryptocurrency-in-India-768x432.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Tax-implications-for-Cryptocurrency-in-India-800x450.jpg 800w\" sizes=\"(max-width: 900px) 100vw, 900px\" \/><\/p>\n<p><span style=\"color: #000080;\"><strong>Brief Introduction<\/strong><\/span><\/p>\n<ul>\n<li>If\u00a0you&#8217;re\u00a0uninterested in\u00a0the government\u2019s debate over the topic, whether cryptocurrency be considered or termed as an asset or currency, then herein we would be discussing about a new\u00a0debate which awaits.<\/li>\n<li>During &amp; after GST raid on crypto exchanges that virtual currencies trade like bitcoin, ETH etc there has been a tug of war between the GST dept &amp; also crypto industry\u00a0on\u00a0whether cryptocurrency is services or goods.<\/li>\n<li>A virtual currency\u00a0that can&#8217;t\u00a0be seen, touched or confiscated by anyone. Neither its owner\u00a0is identifiable\u00a0nor its purchase and sale i.e. supply chain\u00a0may be\u00a0traced. In such a situation, until\u00a0there&#8217;s\u00a0a ban or regulation on cryptocurrency,\u00a0an enormous\u00a0challenge for the departments is\u00a0to impose and collect\u00a0tax from it.<\/li>\n<li>Recently, the Directorate General of GST Intelligence (DGGI) raided several crypto exchanges\u00a0in India. At present, the liability has been fixed by taking their fees and margins\u00a0because the\u00a0basis of earnings and has been asked to deposit the tax.<\/li>\n<li>If experts are to be believed, levying tax on fees and margins on the lines of common commodity exchanges\u00a0implies that\u00a0the govt.\u00a0is treating the work of crypto agencies as \u2018services\u2019, which attracts 18% GST. However, some of the crypto agencies tends to seek legal clarification on this topic.<\/li>\n<li>Since cryptocurrency\u00a0isn&#8217;t\u00a0mentioned anywhere in any law, nor does its trade match with any\u00a0sought of\u00a0existing trade, now this issue seems to be\u00a0attaining\u00a0high\u00a0levels of the GST Council or\u00a0the govt..<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Taxation_on_Crypto\"><\/span><span style=\"color: #000080;\"><strong>Taxation on Crypto<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-4226\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/crypto-currency-acquired-or-generated.jpg\" alt=\"crypto-currency-acquired-or-generated\" width=\"938\" height=\"469\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/crypto-currency-acquired-or-generated.jpg 600w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/crypto-currency-acquired-or-generated-300x150.jpg 300w\" sizes=\"(max-width: 938px) 100vw, 938px\" \/><\/p>\n<ul>\n<li>The beauty of cryptocurrency is its private wealth.\u00a0nobody\u00a0else can see or confiscate it. At present,\u00a0it&#8217;s\u00a0difficult for\u00a0the govt\u00a0to even know from which hands\u00a0it&#8217;s\u00a0passed. Assessment, seizure or recovery\u00a0isn&#8217;t\u00a0possible under the\u00a0income tax\u00a0Act unless the currency owner himself declares\u00a0the proportion which\u00a0he has invested or the department proves it from the available evidence. In such a situation, short term or\u00a0long-term\u00a0capital gain\u00a0also\u00a0becomes difficult to be\u00a0determined.<\/li>\n<li>As far as indirect taxes like GST are concerned, if we consider cryptocurrencies as goods, then its valuation\u00a0isn&#8217;t\u00a0possible. At\u00a0the foremost, only operators i.e. exchanges\u00a0can be\u00a0reached. Their fees and margins as services\u00a0are\u00a0levied 18% GST, but here too there are many problems.<\/li>\n<li>Seller i.e.\u00a0the supplier\u00a0of the currency is required to make the payment of the transaction fee. But the determination of supply of services\u00a0can&#8217;t be\u00a0correct\u00a0because of the\u00a0non-identification of the recipient.\u00a0The utmost important\u00a0problem is that if a recipient or any crypto exchange is outside the country, taxation here will become even\u00a0tougher\u00a0under\u00a0present\u00a0laws.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Experts_Viewpoint\"><\/span><span style=\"color: #000080;\"><strong>Experts Viewpoint<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-4224\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Crypto-header.jpg\" alt=\"\" width=\"834\" height=\"439\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Crypto-header.jpg 760w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/Crypto-header-300x158.jpg 300w\" sizes=\"(max-width: 834px) 100vw, 834px\" \/><\/p>\n<ul>\n<li>\u201cA digital currency is basically a sought of currency which is powered by blockchain technology. Where\u00a0it&#8217;s\u00a0not decided whether\u00a0to contemplate\u00a0it as Goods or Services. However, the basic information in respect of trade value and place of supply cannot be determined in such transactions.<\/li>\n<li>That is, who is buying, how much, from whom and whom, where is selling, nothing\u00a0is identifiable. Hence, the taxability of such transactions can be compares to shooting an arrow\u00a0in the\u00a0dark.\u00a0In case of\u00a0share trading.<\/li>\n<li>Securities\u00a0might not\u00a0be taxable, but processing or transaction fees and taxes are levied through exchange and\u00a0brokerage\u00a0data. All this happens because the\u00a0exchange\u00a0is regulated. Until\u00a0there&#8217;s\u00a0no regulation of cryptocurrency.\u00a0It&#8217;s\u00a0out of the question\u00a0to recover proper tax from him.\u201d<\/li>\n<li>We can compare trading of cryptocurrency with fake chit funds and pyramid schemes. Where one person keeps on collecting money from another and another from the third, with\u00a0the idea\u00a0that\u00a0there&#8217;ll\u00a0be\u00a0lots\u00a0of returns ahead. But\u00a0at some point, in the future,\u00a0its head or company runs away.<\/li>\n<li>He told that if\u00a0the govt.\u00a0doesn&#8217;t\u00a0ban or regulate it, then\u00a0the largest\u00a0danger is of getting trapped\u00a0within the\u00a0younger generation. The new generation tends to invest in crypto more oftenly, in order to earn returns overnight.\u00a0There&#8217;s\u00a0no guarantee that\u00a0the long run\u00a0will\u00a0still\u00a0meet its financial liabilities.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Question_on_Business_Model\"><\/span><span style=\"color: #000080;\"><strong>Question on Business Model<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Cryptocurrency trading\u00a0relies\u00a0on an\u00a0electronic network\u00a0where each terminal acts as a server in itself.\u00a0it&#8217;s\u00a0also called peer\u00a0to peer\u00a0platform. DGGI recovered Rs. 50 crores in respect of tax and penalty from WazirX. But exchanges like Unocoin, which have come under the scanner, are yet to\u00a0serve\u00a0the ultimate\u00a0notice of tax and penalty.<\/li>\n<li>These exchanges complain that\u00a0the govt\u00a0has not been\u00a0able to\u00a0decide under which business model\u00a0they must\u00a0be treated. Some are being charged under\u00a0the principles\u00a0of the e-commerce market place\u00a0and a few\u00a0are being charged under the brokerage regulation. But reports quoting GST officials said that the business model\u00a0of those\u00a0exchanges themselves\u00a0isn&#8217;t\u00a0the same.\u00a0for instance, exchanges like WazirX conduct peer\u00a0to peer\u00a0deals and charge commission\u00a0for their exchange services.<\/li>\n<li>He has told this as his income. However, exchanges like Unocoin and Coinswitch Kuber act as brokers or aggregators of cryptocurrency. They charge\u00a0a set\u00a0amount from the users on their profits.<\/li>\n<li>According to officials,\u00a0there&#8217;s\u00a0a necessity\u00a0for more investigation and regulation of this model. As we all know that GST is levied on value addition, the same should be applicable at every step wherein profit is earned.\u00a0This is often\u00a0possible when the currency is treated as a taxable good or commodity. That too when\u00a0the govt.\u00a0recognizes or regulates it.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Crypto_Trading_Process\"><\/span><span style=\"color: #000080;\"><strong>Crypto Trading Process<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>You can roughly\u00a0think about\u00a0cryptocurrency as a token of a small-shop shop or a hundi between traders and brokers\u00a0within the\u00a0wholesale markets.<\/li>\n<li>That is,\u00a0a slip\u00a0of paper, which has no value\u00a0in itself, but\u00a0within the\u00a0eyes of the giver\u00a0and the\u00a0giver, it\u00a0may be\u00a0of hundreds, thousands or lakhs.\u00a0the most important\u00a0strength of the hundi is that neither a thief can rob it, nor the police can catch it, nor can any authority impose tax.\u00a0the value\u00a0of the hundi was considered between two people. But the creditors and debtors of cryptocurrency are numerous. What sets it apart\u00a0the foremost\u00a0is its technology of use.<\/li>\n<li>In technical terms,\u00a0it&#8217;s\u00a0a digital document transmitted over a blockchain-based network, on\u00a0which each and every\u00a0transaction is signed. Every transaction\u00a0may be a\u00a0block in itself. Basically blockchain\u00a0is basically a\u00a0software protocol.<\/li>\n<li>Similarly,\u00a0there&#8217;s\u00a0SMTP (Simple Mail Transfer Protocol) for our email. Such a chain helps in identifying when the currency exchanged hands and\u00a0what all parties were involved. Blockchain files reside across the network\u00a0instead of\u00a0on\u00a0a particular\u00a0computer. Adding\u00a0a brand-new\u00a0block\u00a0to a specific\u00a0chain\u00a0is termed\u00a0crypto mining.<\/li>\n<li>You have\u00a0to affix\u00a0this network\u00a0to buy\u00a0and sell cryptocurrency. That\u2019s where we\u00a0facilitate your, crypto exchanges. Here you open an account\u00a0rather like\u00a0a demat or trading account for shares.<\/li>\n<li>The sole\u00a0difference is that these exchanges are self-regulated. That is, beyond\u00a0the govt.\u00a0rules and regulations. As\u00a0we&#8217;ve\u00a0mentioned above, how these exchanges have different business models. In such a situation, their fees\u00a0also are\u00a0broadly of three types \u2013 exchange fee, network fee and wallet fee. At present, tax agencies are deciding their\u00a0liabilities\u00a0by considering this fee as income.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Recent_Proposals_on_Crypto_Taxation\"><\/span><span style=\"color: #000080;\"><strong>Recent Proposals on Crypto Taxation<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The reports presented by Media, suggests that the Central Economic Intelligence Bureau raised a proposal to the Central Board for Indirect Taxes and Customs (CBIC) for bringing the cryptocurrency exchanges as well as the platforms under the purview of GST.<\/p>\n<p>After the completion of investigation by the GST department the cryptocurrency exchange WazirX was fined, and their management firm confirmed that the company voluntarily paid additional GST\u00a0in order to cooperate and be compliant with the rules and regulations.<\/p>\n<ul>\n<li>Days after\u00a0the GST authority fined WazirX, their management clarified that they have voluntarily paid the amount of additional GST\u00a0in order to be cooperative and compliant with the rules and regulations.<\/li>\n<li>As per GST authority, the exchange tends to provide its clients, an option to trade and to transact in Rupee or WRX.<\/li>\n<li>In return of such service, the company was charging commission on each transaction in cryptocurrency from buyer and seller both. However,\u00a0the rate\u00a0of commission differ in respect of buyers and sellers and also in respect of the transactions undertaken.<\/li>\n<li>The department has alleged\u00a0that in\u00a0the investigation, it came to the notice of officials that the taxpayer\u00a0wants to\u00a0collect revenue from commission as trading fees, deposit fees and withdrawal fees.<\/li>\n<li>&#8220;The taxpayer was paying GST only on commission earned in rupee but\u00a0wasn&#8217;t\u00a0paying GST on commission earned in WRX.<\/li>\n<\/ul>\n<p><strong>A GST @ 18% shall be applicable on transaction fees. As a result, GST of Rs 40.5 crore\u00a0wasn&#8217;t\u00a0paid by the firm, and the same was recovered by the authority along with applicable interest and penalty on December 30, 21.<\/strong><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-4225\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/crypto.jpg\" alt=\"crypto\" width=\"865\" height=\"387\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/crypto.jpg 630w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/crypto-300x134.jpg 300w\" sizes=\"(max-width: 865px) 100vw, 865px\" \/><\/p>\n<ul>\n<li>After the amount was determined, the Directorate General\u00a0of Goods\u00a0and Services Tax Intelligence undertake scrutinization of the multiple crypto firms involving Buyucoin and Unocoin.<\/li>\n<li>Cryptocurrency platforms that face increased scrutiny from tax authorities for GST evasion are unclear about \u201capplicable provisions\u201d under the country\u2019s taxation regime amid regulatory uncertainty, industry executives told ET.<\/li>\n<li>The industry members commented that the crypto platforms didn&#8217;t pay the amount of GST due to the confusion over the tax applicability on different business models operating in India.<\/li>\n<li>The cryptocurrencies are not considered legal tender in india. They are considered <b>commodities<\/b> as they are tradable in the exchanges. In case it is treated as commodities, any kind of profits or gains on this trading of cryptocurrencies are liable for taxation under capital gain head as per under Income Tax law.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Features_of_CEIBs_proposals_during_this_regard_as_available_publicly_domain_is_excerpted_below\"><\/span><span style=\"color: #000080;\"><strong>Features of CEIB\u2019s proposals\u00a0during this\u00a0regard, as available\u00a0publicly\u00a0domain is excerpted below:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-4227\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/CEIBs-proposals.png\" alt=\"CEIB\u2019s proposals ON BTC \" width=\"935\" height=\"641\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/CEIBs-proposals.png 935w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/CEIBs-proposals-300x206.png 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/CEIBs-proposals-768x527.png 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2022\/01\/CEIBs-proposals-800x548.png 800w\" sizes=\"(max-width: 935px) 100vw, 935px\" \/><\/p>\n<ul>\n<li>The act of cryptocurrency mining\u00a0can be\u00a0treated as a supply of service\u00a0because it\u00a0generates cryptocurrency and charges transaction fees, and\u00a0per se, should classify as an\u00a0intangible asset\u00a0and the same shall be attract GST @ 18%. Thus, persons operating as cryptocurrency miners\u00a0would be required to register under GST, where their annual revenue exceeds \u20b920 lakh in a particular financial year.<\/li>\n<li>GST\u00a0be levied on the transaction fee as well as the currency which is mined by the business miners. Also, there is consideration to bring the wallet service providers under the purview of GST Act 2017. Also, the trading in the cryptocurrency and other related transactions involving transfer, storage, accounting etc.\u00a0shall be considered as supply\u00a0and the same\u00a0be taxed accordingly.<\/li>\n<li>The transaction value in INR or\u00a0a similar\u00a0freely convertible foreign currency\u00a0are\u00a0used to\u00a0determine\u00a0the worth\u00a0of cryptocurrency and thereby the transaction and subsequent tax liabilities. In cases where\u00a0the customer\u00a0and seller are registered as Indian residents and operators, the transaction should be treated as a supply of software.<\/li>\n<li>Cryptocurrency transactions undertaken internationally, by companies registered in India, shall be treated as import or export\u00a0of services, and\u00a0the same shall\u00a0be\u00a0subject to\u00a0IGST. Apart from this, bringing cryptocurrencies under the GST purview is very important, in order to curb\u00a0concealing\u00a0and undermining of legitimate currencies.\u00a0Some of\u00a0these proposals\u00a0don&#8217;t\u00a0seem to be in sync with\u00a0the worldwide\u00a0best practices and would hopefully be reconsidered.<\/li>\n<li>Thus, it is believed, that just like Australia and UK, having clear and progressive guidelines, India would be soon proposing a policy on cryptocurrency.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Precedent_for_Crypto_Taxation\"><\/span><span style=\"color: #000080;\"><strong>Precedent for Crypto Taxation<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>After the investigation by the\u00a0income tax\u00a0department against various crypto exchanges,\u00a0the same has somewhere set a precedent\u00a0round for the\u00a0categorization of crypto assets for taxation purpose.<\/li>\n<li>Long debates have been undertaken by various experts on the categorization as well the tax treatment of cryptocurrencies in India.\u00a0However, they&#8217;re\u00a0yet to clarify as to whether a cryptocurrency be treated as currency, a commodity, a service, or something else.<\/li>\n<li>Various searches were conducted by DGGI on crypto exchanges and hence demanded certain amount GST on their transaction fees or margins.<\/li>\n<li>According to these investigations, the authorities tends to impose an 18% GST on the margins and transactions undertaken by the exchanges in India.<\/li>\n<li>However, still there is no clarification as to the rate of\u00a0GST that shall be levied on cryptocurrency under\u00a0Income Tax Act or GST regulations.\u00a0This can be\u00a0mainly\u00a0because of\u00a0the paradoxity\u00a0around categorizing cryptocurrencies\u00a0like\u00a0Bitcoin and other assets.<\/li>\n<li>As\u00a0to whether\u00a0they&#8217;ll\u00a0be treated similarly to currency, equity, gold, technology, services, or\u00a0some of\u00a0lottery,\u00a0taxation\u00a0rates on returns from different assets are separate and range from 10% to 35%. The GST rates could vary from nil\u00a0to twenty-eight\u00a0as per\u00a0the category.<\/li>\n<li>Even in 2017, tax investigations were\u00a0administrated\u00a0where the department asked top management of some cryptocurrency exchanges\u00a0to elucidate\u00a0their business model\u00a0and the way\u00a0much\u00a0indirect tax\u00a0was being levied.<\/li>\n<li>The govt\u00a0is undertaking discussions with various stakeholders of cryptocurrency, about the complete ban on cryptocurrencies or allowing it in a very\u00a0limited way with the\u00a0Reserve Bank\u00a0of India as a regulator.<\/li>\n<\/ul>\n<p>For any clarifications\/feedback on the subject, don\u2019t hesitate to get connected with the writer at singh@caindelhiindia.com.<\/p>\n<p><span style=\"color: #000080;\"><em><strong>Also Read <\/strong><\/em><em><strong>A<\/strong><\/em><em><strong>rticles :<\/strong><\/em><\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\"><a style=\"color: #000080;\" href=\"https:\/\/www.caindelhiindia.com\/blog\/bitcoin-taxability-under-gst-act-2017\/\" data-cke-saved-href=\"https:\/\/www.caindelhiindia.com\/blog\/bitcoin-taxability-under-gst-act-2017\/\">Bitcoin Taxability under GST Act,2017<\/a><\/span><\/li>\n<li><span style=\"color: #000080;\"><em><u><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-21st-may-2019\/\" data-cke-saved-href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-updates-on-21st-may-2019\/\">India\u2019s Latest Development on Crypto-Currencies<\/a><\/u><\/em><\/span><\/li>\n<li><span style=\"color: #000080;\"><em><u><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/all-about-cryptocurrency-taxation-scenario-in-india\/\" data-cke-saved-href=\"https:\/\/carajput.com\/blog\/all-about-cryptocurrency-taxation-scenario-in-india\/\">Cryptocurrencies Taxation Scenario in India<\/a><\/u><\/em><\/span><\/li>\n<li><span style=\"color: #000080;\"><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/pm-modi-chairs-meet-on-cryptocurrency\/\">Pm modi chairs meet on cryptocurrency\u00a0<\/a><\/span><\/li>\n<li><span style=\"color: #000080;\"><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/guidance-required-on-major-concern-in-crypto\/\">Guidance on major concern in Cryptocurrency<\/a><\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The Treatment of Cryptocurrency\u00a0 as Goods or Services in India:\u00a0 Brief Introduction If\u00a0you&#8217;re\u00a0uninterested in\u00a0the government\u2019s debate over the topic, whether cryptocurrency be considered or termed as an asset or currency, then herein we would be discussing about a new\u00a0debate which awaits. During &amp; after GST raid on crypto exchanges that virtual currencies trade like bitcoin, &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[792],"tags":[816],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/4222"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=4222"}],"version-history":[{"count":3,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/4222\/revisions"}],"predecessor-version":[{"id":4231,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/4222\/revisions\/4231"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=4222"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=4222"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=4222"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}