The Central Board of Indirect Taxes and Customs (CBIC) has sought from India’s top cryptocurrency exchanges details such as the type of digital coins and tokens being traded and their valuation, and how they are divisible.
The body wants to bring crypto assets within the ambit of goods and services tax, and is working on the definition and classification of the crypto asset class to determine taxability on the value of each transaction.
“We had meetings with crypto exchanges on wide-ranging issues relating to the asset class. We have sought a detailed report on different crypto products being traded and their respective transaction fees and how they are getting calculated,” a senior official in the know told Business Standard.
Clarity on the value of these digital products and how they were transacted, he added, would give a fair idea of how to treat them, how it could fit into the GST regime, and what tax rate would apply to them.
Crypto exchanges have been asked to furnish details this month itself.
“It is necessary to confirm the taxability and classification of various crypto transactions because the industry has been subject to various interpretations by different authorities. These require to be hamonised with the interpretation from an income-tax standpoint as well,” said M S Mani, partner, Deloitte.
There are several types of tokens of all cryptocurrencies, and the most common are utility and payment tokens. These do not have their investment backed or guaranteed by regulation.
Currently 18 per cent is levied on the service provided by crypto exchanges and is categorised as financial services.
Crypto assets in India have been in discussion for a long time. India is yet to clear its stand on whether to ban or legalise digital tokens.
The Reserve Bank of India has time and again said they are a threat to the nation’s financial stability.
The government is pitching for global cooperation on regulating such assets.
Meanwhile, the Organisation for Economic Co-operation and Development has developed the Crypto Asset Reporting Framework (CARF).
The Centre has defined cryptocurrencies as virtual digital assets (VDAs) under the direct tax regime.
India’s tax provisions define VDAs as any information, code, number or token (not being the Indian currency or foreign currency) generated through cryptographic means or otherwise.
The government in this year’s Budget imposed a 30 per cent tax on income from crypto assets with effect from April 1, 2022, and 1 per cent tax deducted at source on payment of virtual assets of more than Rs 10,000 in a year and taxation of such gifts in the hands of recipients from July 1.
Feature Presentation: Ashish Narsale/Rediff.com
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