Friday, March 31, 2023

GST stalemate to continue for cryptocurrencies

The proposed move to levy goods and services tax (GST) on cryptocurrencies is set to be delayed as consensus on the modalities has eluded officials from the centre and state governments. As a result, the 50th meeting of the Goods and Services Tax Council, which is expected later this year, is unlikely to finalise the move.
Consensus has eluded the officials because of the “complexities” involved in indirect taxation of cryptocurrencies. Officials say they will need “a few more months” to be able to draw clarity on indirect taxation of virtual digital assets. “I don’t think this subject will be taken up for discussion anytime soon,” an official said. Last year the GST Council had tasked the finance ministries of Haryana and Karnakata to study and identify all relevant supplies associated with the crypto-ecosystem that would fall under the ambit of GST, their nature, whether those activities are goods or services, and their applicable rate based on appropriate classification.
However, the officials of the two states say the need more time to analyse the subject, due to the inherent complications involved.
“The states have said this is a complex issue and they need more time to analyse it. The fitment committee is already looking at what rate the tax has to be applied, and if there are any exemptions to be given. The committee will examine it along with the states report, and then the council will decide,” a government official told Business Today TV.
Meanwhile, the law committee of the GST Council is looking into the legality and applicability of GST on cryptocurrency entities operating from domains outside India.
“The committee has been assessing the possibility of including such entities under Online Information Database Access and Retreival (OIDAR), and depending on whether the recipient is in India or not, a reverse or forward charge will be applicable, said the official.
The law committee has been in discussions over this, and no conclusion has been drawn yet, as per sources.
Last week, the central government tightened regulatory control over virtual digital assets. According to a gazette notification, the government has mandated that a host of trading activities involving such cryptocurrency assets will now come under the ambit of the Prevention of Money Laundering Act.


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