After the Government clarified that bitcoins not a legal tender and not a recognised medium of exchange, the Bitcoin exchanges in India approached the Government for clarification over the levy of tax under the current Goods and Services Tax (GST) regime.
Reportedly, India’s top seven Bitcoin exchanges, which include Zebpay, Unocoin, CoinSecure and BtcxIndia, plan to approach the Advance Authority of Ruling (AAR) for clear answers to these questions.
After the search proceedings conducted by the Income Tax Department, the indirect tax body was also looking at ways in which Bitcoins can be brought under GST. It is in this background, the exchange boards approached the AAR for further clarification. AAR is a quasi-judicial body that can decide the applicability of tax rates.
For the exchanges, the rate could depend on what the authorities deem Bitcoins to be — goods, services or currency. If Bitcoin is held to be a currency, there will be no GST. If it’s a good, then tax of 18% could be levied, and 12% if deemed to be a service.
