The officers’ committee on GST has suggested the GST Council defer a decision on the cryptocurrency and other virtual digital assets tax.
In its report to the GST Council, the Fitment Committee has suggested that a law on cryptocurrency regulation is awaited. Identifying all relevant supplies associated with the crypto-ecosystem would be essential, besides classifying whether they are goods or services.
The committee of officers from the Centre and states, referred to as the Fitment Committee, felt that a deeper study was needed on the issues involved in the crypto ecosystem.
It was decided that Haryana and Karnataka shall study all aspects and submit a paper before the Fitment Committee in due course.
The committee felt that it was required to identify all relevant supplies associated with crypto-ecosystem under the ambit of GST; their nature, whether those activities are goods or services and their applicable rate.
Hence, it suggested that the Council defers a decision on the taxation of cryptocurrency in its next meeting on June 28-29.
The 2022-23 Budget has clarified the levy of income tax on crypto assets; however, on the Goods and Services Tax (GST) front, the classification of cryptocurrency as to whether it is goods or services is still not clear.
From April 1, a 30 per cent income tax plus cess and surcharges are levied on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.
A 1 per cent TDS on payments over Rs 10,000 towards virtual currencies has also been introduced, which will kick in from July 1.
The threshold limit for TDS would be Rs 50,000 a year for specified persons, which includes individuals/HUFs who are required to get their accounts audited under the I-T Act.