Lack of clarity on crypto taxes leaves the Exchanges confused!
Indian government has started to crack down on cryptocurrency-related tax evasion. However, with regards to taxes, confusion arises among the wealthy traders and the crypto exchanges because of the absence of clear cut guidelines. The confusion pervades as to how cryptocurrencies are taxed and seven bitcoin exchanges wants clarification from the regulators.
Recently, Indian National Tax Service has been on a prowl by sending out notices to the wealthy crypto traders asking for paying taxes. They have done inspection on the top cryptocurrency exchanges. However, guidelines are not issued yet by the government on the way cryptocurrencies are taxed that has left exchanges and the crypto users confused.
The Authority for Advance Rulings (AAR) is India’s adjudicatory body on tax matters. This body is comprised of one Supreme Court retired judge and two members, one from Indian Legal Service and the other from the Indian Revenue Service, according to the information provided by its website.
A senior journalist on the matter of cryptocurrency said, “At least one bitcoin exchange has already filed an application with the Maharashtra AAR for future tax liability. The tax department is currently researching the concept since bitcoin is a very complex subject”.
“The question for many bitcoin players is whether GST is applicable on the total revenue or on the margins they earn,” explained Abhishek A Rastogi, a partner at Khaitan & Co law firm, noting that: “This is mainly because the tax authority must give clarity on whether bitcoin exchanges are selling goods and services, or are mere trading platforms that earn margins”.
Rastogi further said abour the country’s “indirect tax department is already looking at ways in which bitcoins can be brought under GST”.
“For the exchanges, the rate could depend on what the authorities deem bitcoins to be — goods, services or currency,” the news outlet elaborated. “If bitcoin is held to be a currency, there will be no GST. If it’s a good, then a tax of 18% could be levied and 12% if deemed to be a service.”