CBIC seeks details on digital assets from India’s top crypto bourses

Source– The post is based on the article “CBIC seeks details on digital assets from India’s top crypto bourses” published in the Business Standard on 29th October 2022.

Syllabus: GS3- Economy

Relevance– Regulation of digital currencies

News- The article explains the taxation related provisions on cryptocurrencies.

The CBIC wants to bring crypto assets within the ambit of GST. It is working on the definition and classification of the crypto asset class to determine taxability on the value of each transaction.

What is the rationale behind this move by CBIC?

clarity on the value of these crypto products being traded and their mode of transaction would give a fair idea of how it could fit into the GST regime and tax rate applicable to them.

There are various interpretations by different authorities on the taxability and classification of various crypto transactions. These need to be harmonised.

What are some facts related to cryptocurrencies?

There are several types of tokens of all cryptocurrencies. The most common are utility and payment tokens.

These do not have their investment backed or guaranteed by regulation.

What is the government stand on cryptocurrencies?

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.

The Organisation for Economic Co-operation and Development has developed the Crypto Asset Reporting Framework (CARF).

What are taxation provisions related to cryptocurrencies?

Currently 18% is levied on the service provided by crypto exchanges and is categorised as financial services.

The Centre has defined cryptocurrencies as virtual digital assets under the direct tax regime.

India’s tax provisions define virtual digital assets as any information, code, number or token generated through cryptographic means or otherwise.

The government in this year’s Budget imposed a 30% tax on income from crypto assets. There will be 1% tax deducted at source on payment of virtual assets of more than Rs 10,000 in a year.