Government can bring Cryptocurrency under GST law, the screw is stuck on the transaction value

Cryptocurrency under GST law: The central government is considering to classify cryptocurrency under the GST law, so that tax can be charged on the full value of the transaction. Currently, the Goods and Services Tax (GST) is levied on the services provided by crypto exchanges and is placed in the category of financial services.

like a cryptocurrency lottery

GST officials told PTI that crypto is similar to any lottery, casino, betting, gambling, horse racing, with 28 per cent GST applicable on its entire value. Apart from this, in case of gold, 3% GST is levied on the entire transaction value.

Should GST be charged on the entire transaction value?

An official said, “There is a need for clarity on levying GST on cryptocurrencies and we are considering whether it should be levied at full value, and whether cryptocurrencies can be classified as goods and services. Is.”

Another GST official said that if GST is levied on the entire transaction of cryptocurrencies, then this rate could be in the range of 0.1-1 per cent. However, first the decision on classification will have to be finalized and then the rate will be discussed.

No clear classification in GST law

The GST law does not clearly specify the classification of cryptocurrencies and in the absence of a law to regulate such virtual digital currencies, one has to keep in mind that while classifying it, the legal framework will treat it as an actionable claim. classifies or not. An actionable claim is a claim that deserves action in court.

The Union Budget 2022-23 has brought some clarity regarding the imposition of income tax on crypto assets. The government is working on a separate law to regulate cryptocurrencies, but no draft has been made public yet.