Officers Committee recommends postponing the decision to impose GST on crypto, digital assets

24 Jun 2022 , 09:17 AM

The GST Council has been advised to postpone a judgment regarding the taxability of cryptocurrencies and other virtual digital assets by the officer’s committee on GST.

Legislation governing cryptocurrencies is expected, according to the Fitment Committee’s recommendation to the GST Council, and it would be crucial to identify all pertinent suppliers connected to the crypto-ecosystem in addition to classifying them as products or services.

The Fitment Committee, a group of officers made up of representatives from the center and the states, decided that a more thorough investigation of the problems surrounding the crypto environment was required. It was determined that Haryana and Karnataka will research every angle and provide a presentation to the Fitment Committee as soon as possible.

The committee believed it was necessary to include all pertinent supplies related to the crypto-ecosystem that fall under the purview of GST, together with their nature–whether they are products or services–and the corresponding rate. Therefore, it recommended that the Council postpone a decision regarding the taxation of cryptocurrencies at its next meeting on June 28—29.

Regarding the imposition of income tax on bitcoin assets, the 2022—23 Budget has offered clarification; nevertheless, in terms of the Goods and Services Tax (GST), it is still unclear whether cryptocurrency is classified as a good or service. As of April 1, these transactions are subject to the same 30% income tax, cess, and surcharges as winners from horse races or other speculative trades.

Regarding the imposition of income tax on bitcoin assets, the 2022—23 Budget has offered clarification; nevertheless, in terms of the Goods and Services Tax (GST), it is still unclear whether cryptocurrency is classified as a good or service. As of April 1, these transactions are subject to the same 30% income tax, cess, and surcharges as winners from horse races or other speculative trades.

Additionally, a 1% TDS has been implemented starting on July 1 for payments made in virtual currencies that exceed Rs 10,000. For designated persons, such as individuals or HUFs required to have their accounts audited under the I-T Act, the threshold limit for TDS will be Rs 50,000 per year.