Cryptocurrencies trade may attract Income Tax, GST; taxes to be paid in this fiscal year
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The Finance Ministry sees tax implications in crypto-currency trading. However, it is clear that levying a tax does not mean the government is legalising private crypto-currencies.
Minister of State for Finance Anurag Thakur said that a comprehensive Bill on cryptocurrencies will fill all the gaps in the policy space. The government intends introducing the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the ongoing session of Parliament.
Another senior Finance Ministry official explained to BusinessLine that the earnings from crypto-currency trade could have income-tax implications, and the commission/fee charged for providing any service to facilitate the deal, a GST component. “Every income is taxable whether it is coming from permissible or impermissible activity... If you are providing any transaction which attracts GST, then the tax has to be paid. When both giver and taker admit that a certain service has been provided and for that some amount has been paid on the basis of a receipt, then the tax has to be levied,” he said.
However, experts feel that taxability could mean legalising the currency, but the official rejected the contention. “Let it be clear that just because income-tax or GST has been charged on the transaction, it does not by itself make the transaction legitimate. Taxability and legality of transactions are independent of each other,” he said.
The government, in its proposed list of Bills to be introduced during the Budget session, listed one “to create a facilitative framework for creation of the official digital currency to be issued by the RBI. The Bill also seeks to prohibit all private crypto-currencies in India, however, it allows for certain exceptions to promote the underlying technology of crytpto-currency and its uses.”
Thakur said the RBI banned crypto-currencies long time back. Then the Supreme Court ordered the withdrawal of the circular facilitating the transaction of digital currency. Following this, the government formed an inter-ministerial committee to look into the matter of digital currency and it has given a report. A Committee of Secretaries also met under the Chairmanship of the Cabinet Secretary and it has also given its report. Now, the Cabinet is expected to take up the Bill soon.
Minister of State for Finance Anurag Thakur said that a comprehensive Bill on cryptocurrencies will fill all the gaps in the policy space. The government intends introducing the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the ongoing session of Parliament.
Another senior Finance Ministry official explained to BusinessLine that the earnings from crypto-currency trade could have income-tax implications, and the commission/fee charged for providing any service to facilitate the deal, a GST component. “Every income is taxable whether it is coming from permissible or impermissible activity... If you are providing any transaction which attracts GST, then the tax has to be paid. When both giver and taker admit that a certain service has been provided and for that some amount has been paid on the basis of a receipt, then the tax has to be levied,” he said.
However, experts feel that taxability could mean legalising the currency, but the official rejected the contention. “Let it be clear that just because income-tax or GST has been charged on the transaction, it does not by itself make the transaction legitimate. Taxability and legality of transactions are independent of each other,” he said.
The government, in its proposed list of Bills to be introduced during the Budget session, listed one “to create a facilitative framework for creation of the official digital currency to be issued by the RBI. The Bill also seeks to prohibit all private crypto-currencies in India, however, it allows for certain exceptions to promote the underlying technology of crytpto-currency and its uses.”
Thakur said the RBI banned crypto-currencies long time back. Then the Supreme Court ordered the withdrawal of the circular facilitating the transaction of digital currency. Following this, the government formed an inter-ministerial committee to look into the matter of digital currency and it has given a report. A Committee of Secretaries also met under the Chairmanship of the Cabinet Secretary and it has also given its report. Now, the Cabinet is expected to take up the Bill soon.
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