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Relief for the time being: GST proposal on crypto related activities may be postponed

Relief for the time being: GST proposal on crypto related activities may be postponed

The GST Council may defer the issue of taxability on activities related to Virtual Digital Assets (VDAs) or cryptocurrencies. The meeting is scheduled to be held in Chandigarh next week.

If postponed, it will give some relief to crypto-investors, at least for the time being. These investors on Thursday took to micro-blogging site Twitter to express their anger over the Income Tax department’s June 22 notification for non-compliance of TDS (tax deducted at source) from July 1.

A senior government official confirmed business Line Regarding a proposal before the Council “to clarify the nature and applicability of GST on various supplies relating to crypto.” Apart from identifying all the supplies, the proposal aims to determine the activities whether they are goods or services, and to finalize the rate of GST accordingly. Crypto-related activities include mining, exchange services, wallet services, payment processing, barter systems, and various other transactions. Now, it has to be decided which will be good and which will be service.

The issue was discussed in the fitment committee meeting, which suggested a more in-depth study, the official said. Haryana and Karnataka are likely to study all the aspects and submit the report to the fitment committee. Accordingly, the Committee will finalize the recommendations for the Council. This means that the matter can be avoided by the council,” he said.

The issue of GST on crypto gained more importance after the Union Budget for FY 2022-23, which coined the term Virtual Digital Assets or VDA for different types of cryptos. It states that the VDA shall include any information or code or number or token (not Indian currency or foreign currency) generated by cryptographic means, a non-fungible token or any other token of a similar nature and any other digital asset, which may subsequently be will be notified. ,

As of today, income from VDA is taxed at the rate of 30 per cent. Loss on account of transfer of VDA cannot be set off against any other income. The gift of VDA is being taxed in the hands of the recipient. and, with effect from 1st July, TDS (Tax Deducted at Source) on payments made in respect of transfer of VDA at the rate of 1 per cent of such consideration above a monetary limit.

On the indirect tax front, in an interview business LineChairman of the Central Board of Indirect Taxes and Customs (CBIC), had said: “Our interpretation is that there is clarity in the law and the commission paid to the operator or exchange, which is providing a platform for transactions in digital currency , is in terms of the service it provides to the users of that platform and, therefore, it is the supply of service which is chargeable to GST. Further, “in the case of exchanges located abroad, the provision is that the supply of service is The location will be India as the service recipient is in India and hence, he will be liable to pay GST on reverse charge basis,” he said.

Published on

23 June 2022

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Relief for the time being: GST proposal on crypto related activities may be postponed

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