The cryptocurrency has experienced various highs recently, and accordingly, more and more individuals appear to float towards this brand new contraption.
Therefore, it is nothing unexpected that exchanging volumes are top dimensions, and significantly smaller traders or investors have aggregated high turnover figures.
We are about to look at the applicability of GST on Bitcoin and other digital currencies being exchanged in the market today.
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Applicability of GST on Bitcoin
GST (Goods and Service Tax) is applicable to the supply of goods and services. Therefore, the clearance of Bitcoins would attract GST in case it falls under the space of either goods or services.
Goods and Service Explained
“Goods” from a GST point of view implies every sort of portable property other than cash and securities. However, it includes growing crops, actionable claims, grass and things appended to or shaping part of the land that is concurred to be severed before supply or under a contract.
Since cash and securities aren’t included yet, it is relevant to investigate what they are concerning the definition.
As the Reserve Bank of India (RBI) has not granted any regulatory endorsement to bitcoin, it should be taken considered that Bitcoin is not the money behind tax assessment under GST. So, does this mean that Bitcoin falls under securities?
According to the GST act, securities have been defined as having the same significance as doled out under sub-section of section-2 of the Securities Contracts (Regulation) Act, 1956. This act defines securities as –
- Scrips, shares, bonds, stocks, debentures or other marketable securities of a like nature in or of any incorporated firm.
- Units used by any collective investment scheme to the traders.
- Units issued to the traders under a mutual fund scheme.
- Security receipts as defined in the clause of section-2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
- Interest or rights in securities.
The individuals who know about cryptocurrencies would concur that bitcoin or other digital tokens don’t fall into the section of securities either.
Is Bitcoin Taxable as Services?
Services have been characterized under GST as means anything besides products, money and securities yet incorporate activities identifying with the use of money or its conversion by cash or by some other mode, from one form, money or section, to another form, money or section for which a different consideration is charged.
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With the above-stated facts, it appears that cryptocurrencies being similar to goods are more likely to be taxed than as services. This suggests since they are goods they should likewise be exposed to GST.
Indeed, you read that accurately! GST on Bitcoin is a reality, and those exchanging the cryptocurrency should consider registration and compliance with GST.
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