The wait for clarity on how much and on which crypto transactions the goods and services (GST) would be levied seems longer as the states panel nominated by the GST Council in 2022 has expressed its inability to submit a paper on taxation of crypto assets, sources told CNBC-TV18.

At the upcoming meeting on October 7, GST Council is likely to discuss the issue and request the "Tax Research Unit under the Central Board of Indirect Taxes and Customs (CBIC) to study the issue and submit a paper on nature and taxability of various supplies in relation to crypto ecosystem," sources added.

The Council had earlier nominated a panel of state officers of Haryana and Karnataka who have expressed their inability to submit a paper on crypto assets.

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Earlier in June and December 2022, during the 47th and 48th GST Council meetings, the matter was deferred as there was no conclusion over issues regarding the nature and taxability of various supplies in the crypto ecosystem.

"The issue regarding the taxability of cryptocurrency under GST is under consideration by the GST Council. With changes made under income tax specifically defining VDA, we can expect similar changes in GST laws. Even in online gaming GST laws followed the oath laid by income tax. The taxability of the cryptocurrency and other digital assets in the upcoming 52nd GST Council Meeting considering the discussion on the taxability of cryptocurrency was deferred in the 47th and 48th GST Council meeting for further examination. GST council may follow the international practice of treating VDA as a payment mechanism for GST considering the C2C nature of supply or follow matured jurisdictions in deeming as securities without amendment of SCRA regulations of Sebi. Council should take cognisance of asset class investment made by consumers on crypto," said Asish Philip Abraham, Partner, Lakshmikumaran & Sridharan.

Given the complex nature of the transactions, the GST Council felt that the issues involved in the crypto ecosystem needed deeper study. The Council had then asked Haryana and Karnataka to study all aspects and submit a paper before the Fitment Committee.

The matter, however, is likely to be deferred again in the upcoming council meeting, sources added.

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(Edited by : Kanishka Sarkar)

First Published:Oct 4, 2023 10:38 AM IST