The GST Council to defer a decision on the virtual digital assets tax
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 ₹ 10,000 towards virtual currencies has also been introduced, which will kick in from July 1.
The threshold limit for TDS would be ₹ 50,000 a year for specified persons, which includes individuals/HUFs who are required to get their accounts audited under the I-T Act.