ROC Compliance GST applicability on Bitcoin in India

GST applicability on Bitcoin in India

GST applicability on Bitcoin in India

GST applicability on Bitcoin in India

GST on Bitcoin – Is Bitcoin trading taxable?

There are a lot of situations in which GST tax could be levied on Bitcoin trading and other cryptocurrencies. Let's find out if there's a GST on bitcoin. Authorized Person of India’s leading Bitcoin exchanges approached the Authority for Advance Ruling because there is little clarity about their very existence.

In April 2018, the Reserve Bank of India prohibited banks from engaging with cryptocurrency-related entities. The government, meanwhile, has issued regular alerts about the risks of just doing business on cryptocurrencies. But the policymakers have so far stayed away from legal or illegal status.

The first piece of clarification came from the Direct Tax Department in February early 2019. According to them, there is a provision for not paying taxes on any assets, and a proposal has been drawn up. This plan contains several important tax levies on currency transactions.

The CBIC is mulling over a plan to be sent to the GST Council of India.

Key points CBIC Plan sent to the GST Council of India

Bitcoin 'mining' would be viewed as a service supply since it produces Bitcoin and requires incentives and transaction fees. Taxes on transaction costs or prizes will be received from the miner. If the amount of the reward exceeds Rs. 20 lakh, it would be appropriate for individual miners to report them themselves under the Goods and Services Tax (GST).

  • The initiative also allows the holding of 'wallets' keys to be taxable. Wallet service providers should be registered under the Goods and Services Tax.
  • Bitcoin exchanges need to register and pay taxes on their income.
  • Trading may collect 18 per cent of Goods and Services Tax.
  • Buying and selling cryptocurrencies would be considered in the product supply group. Other associated facilitation transactions would be classified as services, including supply, transfer, storage, accounting, among others.
  • The value of the transaction in Bitcoin or equivalent of any freely convertible foreign currency will be used to determine the value of the Bitcoin.
  • In a situation where both the buyer and the seller are in India, a transaction will be viewed as a supply of software and a place of supply for the buyer.
  • The place of delivery will be the place of transfer and selling of the registered entity. Even then, where sales are to be made to unregistered entities, the position of the supplier will be deemed to be the place of supply.
  • Integrated Goods and Services Tax would refer to transactions carried out outside the borders of India and would be deemed to be the import or export of goods. IGST shall be imposed on cross-border supplies.

Is Bitcoin is Currency or Not?

  • Although the RBI has not confirmed Bitcoin as a legal tender, the reality that Bitcoin is an acceptable method of payment is significant. It should, therefore, in concept, be acknowledged by the RBI as currency and not as goods.
  • The digital asset in the country may be categorized under the category of 'in-tangible products,' at the same time as other software systems with separate legislation introduced to discourage and penalize the illegal usage of cryptocurrencies, (As the decision of the panel to levy GST on digital currencies could also be useful in regulating digital currencies)
  • Taxation could be made easier if bitcoins were classified as commodities, and bitcoin exchanges were considered to be services on behalf of customers. In total, this latest initiative will change the way virtual currency is treated in India.

Worldwide Scenario of Bitcoin

Bitcoin dealings vary dramatically from country to country.

  • The USA considers Bitcoin as a commodity that can be a fixed asset or an inventory asset.
  • On the other hand, the UK considers it a 'private currency.'
  • Australia has a case-by-case approach to Bitcoins, ranging from a traded commodity to investment, with separate treatment for associated mining or exchange facilitation services.
  • Singapore considered Bitcoin as a valid normal currency in his Country, while Japan treats Bitcoin as a commodity.

Is Bitcoin legal in India?

Bitcoin, as a medium of payment, has neither been approved nor controlled by any central authority in India. Further, Till Today In India There is no set rules, regulations, or Guideline Set for regulating cryptocurrency in India, Which creates a solution laid down for conflict resolution that could occur when dealing with bitcoins. However, transactions with bitcoin come with their own collection of risks Given, This context and given background it is not possible to say that Bitcoins are illegal because there has been no ban on cryptocurrencies in India so far. The Supreme Court of India required the government to come up with policies to regulate the cryptocurrency in India,

Therefore, given that Bitcoin transactions are gradually taking place in India, although the laws governing them are largely absent, we are hoping that the regulator may soon come up with a regulation that will dispel the uncertainty surrounding the legality of cryptocurrencies, their taxability, and the requirement to disclose cryptocurrencies.

Furthermore on the legal status of BITCOIN in India


The market for cryptocurrencies is very nascent in India, and the assesses dealing in such trades are unaware of the real treatment in accounts and tax. It is, therefore, necessary for regulators to come forward with some clarity.

Delays in having proper clarification and evaluation would lead to different treatments being provided by different assesses, plus this would therefore increase the reach of the re-opening of assessments by the authorities to tax the past income of the assesses.

Financial regulators may consider applying a transaction tax approach to such transactions where each transaction can be deemed to be distinct taxes such as STT (Security Transaction Tax) as the volumes of such transactions are tremendous.

In fact, monitoring mechanisms may be placed in place to make sure completeness. This could be one of the easiest ways to get these transactions under the tax umbrella.

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