The officers committee on GST has suggested the GST Council to defer a decision on taxability of cryptocurrency and other virtual digital assets.
The Fitment Committee in its report to the GST Council has suggested that a law on regulation of cryptocurrency is awaited and it would be essential to identify all relevant supplies associated with the crypto-ecosystem, besides classification on whether they are goods or services.
The committee of officers comprising both from Centre and states, referred to as Fitment Committee, felt that a deeper study was needed on the issues involved in 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 which are under the ambit of GST; their nature whether those activities are goods or services and their applicable rate. Hence, it suggested that the Council, in its next meeting on June 28-29, defers a decision of taxation of cryptocurrency.
The 2022-23 Budget has brought in clarity with regard to levy of income tax on crypto assets, however, on the Goods and Services Tax (GST) front, 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, is 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 include individuals/HUFs who are required to get their accounts audited under the I-T Act.